Demystifying Accelerators, DXC, and Pre-Composed Solutions
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2022-10-19 5:00 pm

Cashback Definition


A cashback discount is a promotion type that gives a part of the purchase price back to customers, usually directly to their store card, gift card, or credit card that was used to make the payment. 

In the context of sales promotions, cashback is often offered as an additional loyalty feature, where loyalty members get back a part of the payment back refunded to their account. For example, Pomelo Fashion offers a 10% cashback for each purchase to their loyalty program members:

Cashback discount example from Pomelo

Cashback discounts can also be successfully used as flash sales where stores give back some percentage of the purchase to customers for a limited period of time. The other way to use cashback effectively is to incorporate a cashback loyalty program into the business.

What is the difference between cashback and moneyback?

Cashback and moneyback are often used interchangeably. Cashback is both a banking service that allows users to withdraw cash at the time of purchase and service enabling the reimbursement of a part of expenses.

On the other hand, moneyback is most often presented as a sales promotion where users are rewarded for active card use. In addition, in order to obtain a partial refund, users often have to meet additional conditions. For instance, keep receipts, spend a specific amount with the card in a month or make purchases in the selected stores only.

Why is cashback a good idea for your business?

  • Customer loyalty is rewarded – giving back to people who choose your brand over and over again is a key to marketing success. Whether customers are getting cashback with each purchase or from time to time when shopping at a local store, it is still an important incentive for them to stay loyal and possibly shop even more with extra rewards. 
  • No need to discount your products – when introducing cashback, you don’t need to discount your products upfront and change prices of your products in catalogues for the sake of the promotion, which saves you time. 
  • Your customers are incentified – they’re actually ‘getting’ something extra – a small percentage of their money spent in the form of cashback – instead of just paying a little bit less for particular products. 
  • Cash flow is steady – with cashback, the full amount of cash is transferred to your bank immediately after purchase. Then, on a weekly- or monthly-basis (depending on your choice) you send the cashback to your customers just when the revenue is already fully in. With this model, you are also granted more time to detect any sort of transactional fraud.

Are you wasting time and money on digital promotions?

It’s time for a change.