Cashback: how it works

Gradually appearing in France, cashback is beginning to interfere in the daily lives of the French. Increasingly offered by various companies, cashback has become a major factor in standing out from the competition. However, even if it is appreciated by a growing number of consumers, few people understand how it works. Therefore, an explanation is necessary on this subject. This will bring more clarity to this system that is both mysterious and profitable.

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Cashback: The Definition to Understand Everything from A to Z

Cashback is a promotional technique aimed at reimbursing the customer part of the amount of a purchase they have made. Hence the term "cashback", which literally means "money refunded". This reimbursement is based on a certain percentage. The percentage varies depending on the companies that offer a cashback system to their customers.

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Different Types of Cashback Existing

Online Cashback

The most common type of cashback is the one found online, when we shop online. There are a wide range of websites offering cashback, such as Poulpeo, Wildilo, iGraal, Joko, eBuyClub, etc. The principle is simple. When you create an account on one of these sites, they receive a commission on your online purchases and share it with you in a cashback fund. Once you have accumulated a certain amount, say €20, you can cash out your money.

Bank Card Cashback

Another type of cashback, which is becoming more and more common over time, is offered by bank cards. Here, all purchases made with your card will be partially refunded and credited to your account. However, this refund varies according to the contractual conditions of the chosen entity. There are a variety of financial institutions offering cards with a cashback system. For example, Crypto.com, Vivid, Floa Bank, Boursorama, LCL or Orange Bank.

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Benefits of Cashback for Consumers

Earn Money from Your Regular Purchases

The main advantage of cashback is, above all, the partial reimbursement of our purchases. Indeed, being paid when shopping provides a certain satisfaction. In addition, over time, you manage to save money.

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Can be combined with Promotional Offers

In addition to earning money, it is often possible to combine your cashback with discounts, vouchers, loyalty points, coupons or promo codes. This turns out to be a real opportunity to save money and thus, at the same time, balance your purchasing power.

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A Sponsorship System

To earn more money, a sponsorship system is often set up. For example, with the cashback site iGraal, you earn €3 per sponsored person and 10% of all their earnings. As for your referrals, they can benefit from a bonus when they register or make their first purchase. For example, the Poulpeo site offers a welcome bonus of €5 for any registration via a sponsorship link.

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Disadvantages of Cashback for Consumers

Cashback, Yes, but Under Certain Conditions

While cashback is very beneficial to us, it varies greatly depending on who offers it. Some have the best cashback rates compared to their competitors, reaching up to 20% or more. But this rate is limited to a very small number of partner companies. Others will offer lower rates, not exceeding 5%. However, this rate will be applicable to all of your purchases, etc. Hence the importance of carefully examining the conditions of a cashback system.

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Withdrawal Thresholds

On cashback sites, it is not possible to automatically recover the money you earn. Indeed, a certain threshold must be reached to withdraw your winnings. Only once this threshold is reached can you make withdrawals, usually by bank transfer. This transfer will take several days to arrive. Therefore, this forces you to consume more to reach your threshold and withdraw your money.

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Overconsumption

Going on shopping sprees in the hope of earning even more money is clearly not a good idea. Especially for your credit card. And this is one of the biggest drawbacks of cashback. It encourages us to make impulsive purchases. Therefore, the risk of consumer addiction is never far away. So be careful in managing your finances and do not succumb to temptation.

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Benefits of Cashback for Businesses

Increased Sales and Customer Loyalty

Today, cashback has become a real sales argument to attract new customers. Especially in e-commerce. Many are more willing to spend their money on online sales sites if they offer a cashback rate. Why? Because it allows them to earn money and thus save. A real boon given the current economic context. According to a study conducted in 2019 by the Syndicat National du Marketing de Performance (SNMP), cashback can increase the average basket of an online store by 10% to 20%. Cashback therefore helps to build customer loyalty while encouraging purchases.

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Disadvantages of Cashback for Businesses

The only drawback for companies is that cashback is not deeply rooted in the habits of the French. This is because this system can sometimes be perceived as dubious. Indeed, the offers proposed can sometimes be so tempting that some end up being suspicious. This is the opposite of a company's marketing strategy, which aimed to attract customers rather than repel them.

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Cashback Sites or Apps?

The various disadvantages mentioned above mainly concern cashback sites. Therefore, it is better to use cashback applications, which are much more modern. Generally, these types of applications integrate cryptocurrency management. Equipped with a much more reliable payment system, they allow you to quickly recover your earnings and benefit from a greater number of partner stores. And one of the applications that best meets these criteria is Lyzi.

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Lyzi: An Innovative Cashback Solution

Available on Google Play and the Apple Store, Lyzi combines two contemporary sectors: cryptocurrencies and cashback. Aiming to make the latter accessible to the general public, it allows users to make purchases in cryptocurrencies at its partner stores. For each purchase made, users receive a cashback ranging from 1% to 5%, which can be combined with various promotional offers. Transactions are free of charge, and the earnings made are instantly available.