Cashback websites offer financial incentives to attract consumers. We’ll explore how these services work, their benefits, and their drawbacks in Australia.
The current economic climate opens itself up to financial incentives and rewards programmes designed to attract consumers and encourage them to make purchases. One such popular incentive is the cashback service. Cashbacks allow users to receive a portion of their spending back, offering a financial benefit that can accumulate over time.
In this blog, we will explore the mechanics of a cashback service, how it works, and the pros and cons of using such services in Australia.
What are Cashback Websites?
A cashback service is a financial incentive programme where consumers receive a percentage of their purchase amount back as a rebate or reward. Here’s a step-by-step breakdown of how a typical cashback service works.
Partnering with Merchants
Cashback services collaborate with a network of merchants, including retailers, online stores, travel websites, and more. These merchants agree to offer cashback rewards to customers who make purchases through the cashback service’s platform.
Consumer Sign-Up
To access any cashback rewards, consumers need to sign up and create an account with the cashback service. Registration is usually free, and users are required to provide basic information such as name, email address, and payment preferences.
Browsing the Cashback Platform
Once signed in, users can browse through the cashback service’s website or app to explore the list of partner merchants. Each merchant’s page displays the cashback percentage or amount offered on eligible purchases.
Clicking Through to Merchant
To qualify for cashback rewards, users must initiate their purchase by clicking through to the merchant’s website from the cashback service platform. This click serves as a tracking mechanism to identify the source of the referral.
Making the Purchase
After clicking through, users proceed to make their purchase on the merchant’s website as they normally would. The cashback service tracks the transaction through cookies or unique referral links to attribute the purchase to the user’s account.
Verification and Processing
The cashback service verifies the purchase and confirms that it meets the eligibility criteria. This process may take some time as merchants often have return policies and verification periods before releasing the cashback.
Crediting to User Account
Once the verification is complete, the cashback amount is credited to the user’s cashback account. The funds can then be withdrawn or redeemed through various payment methods, such as bank transfers, PayPal, or gift cards.
Advantages of Using a Cashback Service
Earn Money on Everyday Purchases
One of the most significant advantages of cashback services is the ability to earn money on everyday purchases. From groceries to clothing, users can receive cashback rewards for purchases they would make anyway, effectively saving money in the long run.
Sometimes, cashbacks are critical in light of certain events that were cancelled due to unforeseen circumstances. In early April 2024, the organisers of this year’s GABS craft beer and cider festival pledged $100k to the show by offering $20 cashback drink vouchers to patrons who bought their tickets before 18 April 2024 and attendees may have a chance to land value offers with partner merchants worth as much as $250 after the festival. The move was seen as counterweight to the Independent Brewers Association’s cancellation of this year’s BrewCon trade show.
Easy to Use
Cashback services are user-friendly and require minimal effort. Users can simply sign up, shop through the platform, and let the cashback service handle the rest. It’s a hassle-free way to earn rewards while shopping.
Additional Savings and Incentives
Cashback services often offer additional deals, discounts, and promotions on top of the cashback rewards. Users can benefit from extra savings, making their purchases even more cost-effective. Some cashback services are supposedly able to give their customers as much as 100 per cent of their money back, and others are known to even put the cashback on your super instead of to your digital wallet.
Versatility in Redemption
Most cashback services offer a variety of redemption options, allowing users to choose how they want to receive their rewards. Whether it’s cash transfers, gift cards, or charitable donations, the flexibility caters to different preferences.
Disadvantages of Using a Cashback Service
Restrictions and Exclusions
Some cashback services have restrictions on certain purchases or merchant categories that are eligible for cashback rewards. Users may find that their preferred purchases are not eligible for cashback, limiting the potential rewards.
Delayed Payouts
Cashback rewards are often subject to verification and processing periods, which can delay the payout. Users may need to wait for several weeks or even months before they can access their cashback funds.
The problem is also compounded with the possibility that some financial institutions might shut down their cashback offers before any payouts are made. RateCity’s Eden Radford reported in May 2024 that Westpac Bank subsidiaries St George, BankSA, and RAMS Home Loans were scrapping their home loan refinance cashbacks this year. The plan calls for all three companies to accept cashback applications until 30 June 2024 and the clients must settle accounts by 31 October. St George and BankSA refinances are marked at $2,000 cashback, while a $3,000 cashback is available for RAMS refinances.
Temptation to Overspend
While cashback services offer incentives for spending, they may also encourage users to overspend or make impulsive purchases to maximise rewards. It’s essential to maintain responsible spending habits to avoid falling into this trap.
Potential Privacy Concerns
Using a cashback service may require sharing personal data and purchase information with the platform. Users should carefully review the privacy policy and security measures of the service to ensure their data is protected. The ACCC can intervene if there are consumer situations with a cashback provider that, for example, has no intention to redeem a reward. The team at Choice AU warned that some cashback services pin a user’s location data to tailor potential deals.
Conclusion
Cashback services present a valuable opportunity for consumers to earn money back on their purchases and enjoy additional savings. While cashbacks come with their share of pros, such as easy usability and versatility in redemption, users should be mindful of potential cons, including delayed payouts and privacy concerns. Ultimately, responsible usage and informed decision-making can help consumers leverage cashback services in Australia to make the most of their spending while protecting their financial interests.
DISCLAIMER: This article is for informational purposes only. QUICKLE has no working relationships with any cashback provider or merchant using cashback services, nor endorse or disparage any cashback usage.
