Reward mechanics
Cashback that can only be spent with you
Give back a percentage of every purchase as balance on the customer's wallet card. It feels like money, it shows on the lock screen, and unlike a discount it brings them back to spend it.
- Percentage or fixed rules
- Balance on the lock screen
- Spendable only with you
- No app for customers
Why cashback converts differently
It is the most immediately understood reward there is — and the one customers come back to claim.
A discount is spent once; cashback brings them back
Taking 10% off at the till costs you margin on a sale you already had, and the customer leaves. Giving 10% back as balance costs the same margin but creates a reason to return — and they can only spend it with you.
No conversion maths to explain
Points need a translation step: 340 points means nothing until someone tells you what it buys. A cashback balance is already in currency, so its value is obvious at a glance. That makes it the easiest mechanic for staff to pitch and customers to trust.
It suits varied and higher-value baskets
Like points, cashback scales with the purchase, so a big spender is rewarded proportionally. Unlike points it needs no reward catalogue, which makes it a good fit for businesses whose products change often — retail, grocery, anywhere a fixed reward list would go stale.
The balance is visible without opening anything
The credit shows on the wallet pass, so it appears whenever the customer opens their wallet. A reward a customer can see is a reward they remember; a balance buried in an account is one they forget.
Launching cashback
One number to set, then it runs itself.
- 1
Choose the rate
A percentage of each purchase, or a fixed amount per transaction. Set it from the margin you can afford to return — this is a marketing cost you only pay to customers who came back.
- 2
Decide any minimum
Optionally require a minimum balance before it can be spent, so credit accumulates into a meaningful return visit rather than being consumed a few units at a time.
- 3
Enrol at the counter
A QR scan and a phone number, and the card is in the customer's wallet with the balance visible from the first transaction.
- 4
Redeem at checkout
Your staff scan the pass and apply the balance against the bill. The card updates instantly, so the customer always sees what is left.
Making cashback work without eroding margin
Choosing the rate, whether to set a minimum, and where cashback beats points.
Cashback is the most legible loyalty mechanic — everyone understands money. That clarity is its strength and also the reason it needs a rate you have actually calculated rather than one that sounded generous.
Two decisions determine whether it pays for itself.
The rate is a marketing budget, not a discount
Work out what percentage of revenue you would spend to bring a customer back, and set the cashback rate there. The difference from advertising is that you only pay it after the visit has happened, which makes it one of the most efficient acquisition-free growth levers available to a small business.
Be careful about generosity as a launch tactic. A rate you cannot sustain has to be cut later, and cutting a cashback rate is far more visible to customers than quietly changing a points ratio.
Whether to require a minimum balance
Without a minimum, customers spend small amounts of credit continuously, which effectively turns cashback into a rolling discount. With a minimum, the balance accumulates until it is worth a deliberate return visit — which is the behaviour you are actually buying.
A sensible minimum is roughly the value of one typical purchase. Below that it changes nothing; far above it and the balance starts to feel unreachable, which is the same failure as a twelve-stamp card.
Cashback or points?
Choose cashback when your product range changes often, when your customers are price-aware, or when you want the reward to need no explanation. Grocery, retail, fuel, anywhere a fixed reward catalogue would be a maintenance burden.
Choose points when you want to control what the reward is — steering customers toward a high-margin product, or a gift catalogue that makes the programme feel richer than its cost. Points let you decide the reward; cashback lets the customer decide.
Both scale with spend, so both fix the problem stamps have with varied basket sizes. The choice is about control versus simplicity, not about generosity.
The liability nobody plans for
Unspent cashback is money you owe. That is fine and normal, but it should be visible to you rather than a surprise, because a large accumulated balance across hundreds of customers is a real number on your books.
The healthy pattern is steady redemption: customers earning and spending in a rhythm. If balances only ever grow, the minimum is too high or customers have forgotten the card — and a single notification reminding them what they have waiting is usually the highest-converting message a cashback programme ever sends.
Other reward mechanics
Cashback is one of four. Here is where the others fit better.
Points programmes
When you want to control what the reward is, or offer a catalogue customers choose from.
Digital stamp cards
The simplest mechanic there is, and the right one when every visit is worth about the same.
Pricing
Every mechanic is on every plan — the tiers differ by capacity, not capability.
Cashback questions
- Set it from the margin you can afford to return, treating it as a marketing cost you only pay to customers who came back. Avoid launching at a generous rate you cannot sustain — reducing a cashback rate later is much more visible to customers than adjusting a points ratio.
Give something back that comes back
14 days free, no credit card. Set your rate and change it whenever you like.