While shopping online, everyone checks about the cashback. Despite this exemption from customers, companies also benefit. After all, what is the fund behind this?
If you want to order food from a food delivery app or order your favorite goods from the e-commerce website, you definitely know about the cashback offer just before the payment. Cashback is the wonder of digital payment in today’s time, which increases your happiness a little more when you place a favorite order. Have you ever wondered how a company gives you this discount on payment? What is a cashback and how do you benefit the customer as well as the company? Today we are giving you information about this.
What is Cashback?
As a customer, this is definitely your chance to get some discount on the payment. But from the perspective of companies, cashback is a kind of marketing tool, with the help of which they do their own branding. Along with this, they also help in increasing their market share.
How does Cashback work?
If you take credit card only, then these companies give cashback of 1 to 10 percent to their customers based on their expenses. Credit card companies also offer this cashback on the basis of shopping habits of the customers. Like- If a company gives you 2% discount on selected restaurant, then 5% discount is given on shopping center.
On the other hand, when the merchant site receives payment through a credit card, then the credit card company also receives a small part of the payment from the merchants. This is called merchant fee. Credit card issuers give discounts to some customers, which is called cashback.
What is the fund of cashback sites?
If you talk about cashback sites, then they work on the fund of affiliate marketing. These sites increase sales of their products and services by partnering with many companies. Now they charge a commission on every cell from their website. These sites are charging commission from companies, but are giving a small part of this as cashback to the customers as well. In the case of cashback, more customers buy from their site and thus their earnings also increase.
Cashback benefit comes in different ways
Talking about e-commerce sites or digital payment companies, their cashback percentage is not always fixed and they do not pay in cash either. Sometimes it is in the form of points, coupons or wallet money. The biggest advantage of using the cashback site is that you can get it directly in your bank account.
What is the difference between Cashback and Discount?
The benefits available through discounts and cashbacks seem almost the same. Meaning in both cases you have to spend less money on the purchase of a product or services. But the way of working of both is different. Experts say that the company benefits in a short time through discounting. However, continuing it for a long period of time affects the brand image.
That is why companies use cashback to increase sales in the long run. It has two advantages. The first is that there is no impact on the brand image and second that the target customer also gets the benefit. This also makes the customers satisfied and they stay connected with the same brand for a long time.
These things also have to be kept in mind while taking cashback
You might find the cashback strategy a little easier, but in reality it does not happen. To avail the cashback, the customer has to make a purchase from the same website the next time too. Instead they get some cashback. Thus the customer remains with the same brand for a long time in the lure of cashback.
Apart from this, there are some terms and conditions on cashback. Just like you will buy up to a fixed limit, only then you will get the benefit of cashback. Also, there is a cap on cashback in the maximum time that you cannot get a profit of more than Rs.