Cashback
Payment card benefit that refunds the cardholder a small percentage of the amount spent on a particular purchase. It is an effective way to incentivize spending and reward customers for their loyalty.
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Cashback - Boost Customer Loyalty and Spending
In today's competitive financial landscape, cashback has emerged as a game-changing strategy for businesses looking to attract and retain customers. But what exactly is cashback, and why should your company consider implementing it? Let's dive into the world of cashback and explore its benefits and versatile applications.
Why Should We Use Cashback?
Cashback is more than just a perk – it's a powerful tool that can transform your business. Here's why:
- Enhance Customer Loyalty: By offering a percentage of money back on purchases, you create a compelling reason for customers to choose your service over competitors. This incentive encourages repeat business and fosters long-term relationships.
- Boost Customer Spending: The prospect of earning cashback motivates customers to spend more. It's a win-win situation: customers feel they're getting more value, while your business sees increased revenue.
- Gain a Competitive Edge: In a crowded marketplace, cashback can be the differentiator that sets your product apart. It's an attractive benefit that can sway potential customers in your favor.
- Real-Time Gratification: With immediate calculation and allocation of cashback after transactions, customers experience instant rewards, reinforcing positive associations with your brand.
- Flexible and Customizable: Cashback programs can be tailored to suit your business model and customer preferences, allowing for targeted promotions and strategic incentives.
Cashback & fees money flow
Cashback is an internal transaction for a partner who wants to top up the user's balance as part of the loyalty program.
Our card & balances management system (Antaca) automatically debits the masterbalance with this transaction.
Cashback Rules: How to Maximize Your Rewards
The true power of cashback lies in its flexibility. Here are some innovative rules and use cases you can implement:
- Percentage-Based Rewards: Offer a consistent cashback percentage on all purchases (flat rate), such as 0.5% cashback on every transaction. Alternatively, implement tiered rates to reward bigger spenders, like 0.2% for transactions up to $100, and 0.5% for transactions over $100.
- Fixed Amount Rewards: Provide a fixed cashback amount for each qualifying transaction, regardless of the purchase amount. You can also offer different fixed cashback amounts based on transaction value ranges.
- Merchant-Specific Cashback: Boost partnerships by offering higher cashback rates for specific merchants. For example, 2% cashback on purchases from your partner stores.
- Category-Based Rewards: Encourage spending in particular sectors by offering higher cashback rates for specific transaction categories. For instance, 3% cashback on all bookstore purchases (MCC code 5942).
- Payment Method Incentives: Promote certain payment methods by offering higher cashback rates. For example, 0.5% extra cashback for transactions made with Samsung Pay.
- Geographical Targeting: Encourage local or international spending with location-based cashback rules. Offer 1% cashback on all transactions made within the EU.
- Currency-Specific Rewards: Incentivize transactions in specific currencies, such as offering 0.75% cashback on all USD transactions.
- Time-Limited Promotions: Create urgency with limited-time cashback offers. For example, double cashback rates during holiday shopping seasons.
- Cumulative Rewards: Reward loyal customers with increasing cashback rates based on their total spend over time. For instance, unlock 1% cashback after $1000 in total purchases.
Cumulative Rewards feature needs implementation.
How to implement cashback?
Please feel free to contact us and we will setup various cashback rules on Verestro platform for you.
Please make sure you build your cashback network with partners, merchants etc.
It is not part of our responsibilities at the moment.
Introduction
Cashback is a payment card benefit that refunds the cardholder a small percentage of the amount spent on a particular purchase. It is an effective way to incentivize spending and reward customers for their loyalty.
Purpose of the documentation
This documentation provides detailed information about the Cashback product, including its features, use cases, and technical specifications. It aims to assist developers and stakeholders in understanding how to integrate and utilize the Cashback produt effectively.
Target audience
The primary audience for this documentation includes developers, product managers, and technical stakeholders who are involved in integrating or managing the Cashback product within their systems.
Overview
Cashback is a financial incentive where cardholders receive a percentage of the money they spend back as a reward. This refund is typically credited to their account or card balance.
How cashback works?
When a cardholder makes a purchase using their payment card, a predetermined percentage of the transaction amount is refunded to them as cashback. For instance, if a cardholder spends $200 and the cashback rate is 2%, they will receive $4 as cashback.
Cashback money flow
Cashback is an internal transaction for a partner who wants to top up the user's balance as part of the loyalty program.
Our card & balances management system (Antaca) automatically debits the masterbalance with this transaction.
Benefits of using cashback
- Customer Loyalty: Encourages repeat purchases and enhances customer loyalty.
- Increased Spending: Motivates customers to spend more to earn cashback.
- Competitive Edge: Offers an attractive benefit that can differentiate your product from competitors.
Key features of the cashback
- Customizable Rules: Create specific cashback rules such as minimum transaction amounts.
- Real-Time Processing: Immediate calculation and allocation of cashback after transactions.
- Secure and Scalable: Robust security measures and scalable architecture to handle large volumes of transactions.
Common scenarios for cashback usage
Online shopping
- Scenario: A customer makes a purchase on an e-commerce platform.
- Process: The transaction amount is checked against the cashback rules, and the applicable cashback is credited to the customer’s account.
In-store purchases
- Scenario: A customer uses their payment card at a physical retail store.
- Process: Similar to online shopping, the transaction is processed, and cashback is calculated and credited in real time.
Subscription services
- Scenario: A customer subscribes to a monthly service such as streaming or software.
- Process: Each recurring transaction is evaluated for cashback eligibility based on the defined rules.
Cashback Calculation Models
The cashback amount can be calculated in various ways as described below. We can distinguish between two fee calculation models: percentage and fixed.
Percentage price models
| Percentage Flat Rate | Percentage Tiered Rate | Decimal Fraction Flat Rate | |
| Description | "x" % of the transaction value |
"x" % of the transaction value for transactions > 100 USD "y" % of the transaction value for transactions <= 100 USD |
A fraction of the transaction value after the decimal point |
| Example cashback amount |
0,5% * 125 USD transaction = 0,62 USD |
0,5% * 125 USD transaction = 0,62 USD 0,2% * 95 USD transaction = 0,19 USD |
0,45 USD when transaction value was 125,45 USD |
| Status | Possible | Possible | Requires development |
Important! Decimal Fraction Flat Rate calculation model requires development.
Fixed price models
| Fixed Flat Rate | Fixed Tiered Rate | |
| Description | "x" USD per transaction |
"x" USD of the transaction value for transactions > 100 USD "y" USD of the transaction value for transactions <= 100 USD |
| Example cashback amount |
0,05 USD |
0,05 USD for 150 USD transaction 0,02 USD for 75 USD transaction |
| Status | Possible | Possible |
Cashback Trigger Models
This section describes the moment when cashback is executed.
| Instant | Periodic | Manual | |
| Description | Automatically after the transaction occurs | Once per specified period (daily, weekly, monthly, quarterly, yearly) | Triggered manually by the user in the app (or via API) |
| Status | Possible | Requires development | Requires development |
Important! Periodic and Manual triggering models require development.
Cashback Payout Conditions
This section describes the rules that define whether cashback should be issued for a given transaction. These rules allow you to specify the conditions that must be met for cashback to be paid out, taking into account transaction data (merchant ID, transaction category, transaction amount, etc.).
Transaction/cashback amount conditions
| Single transaction amount | Cashback amount | Sum of transactions amount in specified period | |
| Description | Cashback only if the transaction amount is greater/less than "x" USD | Cashback only if the cashback amount does not exceed/exceeds "x" USD | Cashback once per specified period if the total transaction amount within that period is greater/less than "x" USD |
| Status | Possible | Requires development | Requires development |
Important! Cashback amount and Sum of transactions amount in specified period require development.
Transaction data conditions
The product can calculate cashback based on specific transaction data. Below are the specific elements according to which we can define cashback rules.
| Merchant identifier | MCC Code | Capture mode | Wallet type | |
| Description | Cashback based on the specific merchant or set or merchants. | Cashback based on the transaction category or set of categories. | Cashback based on method of payment. | Cashback based on digital wallet used for the transaction. |
| Example cashback behavior | 0,5% cashback on transactions made at Ikea merchant | 0,2% cashback on transactions made at book stores (MCC: 5942) |
0,25% cashback on transactions made onsite | 0,01% cashback on transactions made with Samsung Pay |
| Transaction type | Country | Currency | |
| Description | Cashback based on the specific transaction type (POS, ATM, eCommerce) | Cashback based on the transaction country | Cashback based on the transaction currency |
| Example cashback behavior | 0,3% cashback on eCommerce transactions. | 0,02% cashback on transactions made inside the EU. | 0,04% cashback on transactions made in USD. |
If multiple cashback conditions are defined, each condition must be met for cashback to be awarded.
Example cashback definitions:
0,05% cashback on transactions made at Ikea merchant, which have value greater than 50 USD, and are made onsite with Samsung Pay wallet.