Blue Chip Stamps started as a trading stamps company called "Blue Chip Stamp Company." They were a competitor of S&H Green Stamps. Blue Chip stamps were a loyalty program for customers, similar to discount cards issued by pharmacies and grocery stores in the digital era. A customer making a purchase at a participating store (typically grocery stores, gasoline stations, and pharmacy chains) would be given stamps in proportion to the dollar amount of the purchase. The stamps were dispensed by machines adjacent to the cash register. The customer would paste the stamps (which could be moistened like postage stamps) into books. The books could then be taken to a redemption center and redeemed for merchandise, such as lawn furniture, dining tables, tableware, and many other items. The redemption centers did not maintain a full inventory of items but would order from a catalog on behalf of the customer.
The loyalty program was funded through the overall pricing of goods in the participating retailers. The recession of 1980 and cost cutting caused the program to lose popularity, and the growth of credit card transactions competed for retail margins. As computerization developed, less-cumbersome loyalty programs were developed. These programs required less of a customer's time and had lower operational costs. They did not require physical locations for redemption, and the discounts often were restricted to the products offered by the participating stores, i.e., the participating stores were discounting merchandise that they would keep in stock even without the reward program.