Cashback Apps

The concept of giving cash back to customers when they make a purchase is nothing new. The idea was first launched as long ago as 1844, when the Co-op introduced its dividend scheme. This rewarded customers with a share of the profits, based on the goods they had bought.

In the early years, each customer kept a book with a record of their purchases and their cash reward was paid out twice a year. In 1967, the Co-op began issuing dividend stamps, which were awarded to customers, depending on how much they had spent.

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The self-adhesive stamps were saved in books and could be exchanged for cash to buy Co-op goods. The "divi" stamp scheme became massively popular, with many consumers saving books of stamps to spend at Christmas. However, the scheme gradually disappeared, as other supermarket loyalty schemes expanded.

Loyalty schemes

In modern times, many supermarkets and other retailers operate customer loyalty schemes, with customers rewarded for spending with shopping coupons, free merchandise and rewards points that can be turned into cash to spend in-store or online. The most notable are the Tesco Clubcard and the Sainsbury Reward Card, both introduced in 1995.

Customer loyalty schemes benefit both the shoppers and the retailer, in terms of increased spending. When Tesco launched its Clubcard, customer spending shot up. Clubcard holders were soon spending 28% more at Tesco, while sales at Sainsbury dropped by 16% - hence the latter followed suit with its own loyalty scheme.

Other supermarkets, including Iceland and Morrisons, have their own customer loyalty schemes, as do retailers such as Superdrug, which operates its Health and Beauty Card.

Cashback apps

Today's cashback apps are a modern addition to customer loyalty schemes in the retail world. They have become very important in recent years, in terms of attracting consumers to boost retail sales, while saving the shoppers money. They are the modern equivalent of the old Co-op dividend concept, brought up to date using 21^st century technology.

Instead of laboriously collecting stamps and sticking them in a book, to be redeemed later, modern consumers can enjoy the benefits of receiving cash back with one click on their mobile phone. A survey carried out in 2018 by Bankrate revealed 63% of smartphone users had at least one such app.

In the decade since smartphones were introduced, consumers have embraced the technology that helps them to keep track of their spending, make smarter decisions and gain rewards. This is why cashback apps have become so important in the 21^st century retail sector, as they are meeting customers' needs.

How do cashback apps work?

Rather than retailers working independently to issue a financial reward to customers as a thank you for shopping, a cashback app works in conjunction with many different retailers through one website.

Cashback sites are a simple concept: rather than going directly to an online shop, customers access the retailer's store via a link from a cashback website. The customer still receives their item directly from the retailer, but they will also receive some money from the cashback website. This is often a percentage of the total cost of their goods.

The sites link to retailers who sell just about everything, including toiletries, groceries, clothing, insurance policies and even the best broadband deals.

Research carried out on various cashback sites shows that customers may wait an average of 12 weeks for their money to clear through their bank account.

Competition

Retailers are all competing against each other to be able to reward the best loyalty bonuses to shoppers, as the cashback apps are great marketing devices. Shop goods are promoted to a wider audience and this can boost sales.

The retailers pay the cashback sites a sum of money in advertising commission before the cashback sites pay it back to the consumer. Some cashback sites charge an annual fee, while others simply take a cut from the commission from the sales.

Consumer research shows TopCashBack is one of the most popular cash back apps of 2019. It has a generous revenue-sharing policy, sharing 100% of the commission it earns with site users.

Rather making money through referrals, TopCashBack makes revenue via adverts and sponsors. This means it's able to offer some of the top cash back deals on the web today. It also has a policy of matching offers if users find a better deal elsewhere.

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