How does cashback shopping work?
August 5, 2008
Cash back shopping is becoming hugely popular in the UK with a increasingly large number of websites offering cashback rewards on online purchases from 1000s of internet retailers. Cashback sites have already been popular in the United States for many years, but are now becoming prominent in the UK with the leading sites constantly looking to find the best deals for their members.
So how do I earn cashback?
The process could not be simpler. The first thing you have to do is register with a cashback website.
Next you simply browse the cashback website to find the retailer you are looking for. Lets imagine you are looking for Dell, which pays up to 6% cashback on your purchase. You would simply search for Dell on the cash back site, then click on the link to the Dell homepage.
It is important that you go to the Dell homepage via the link on the cashback website rather than by typing dell.com in your web browser or searching by Google. This is because the link on the cashback website features a tracking code, which is how it identifies that you are entitled to cashback on your purchase.
Once you are on the Dell homepage, you just complete your purchase as normal. There is no need to enter any code to claim your cash back or enter any additional details. You just purchase exactly as you would have if you had gone directly to dell.com. However, you will not receive any cash back if you have not used the link on the cash back website to go to Dell. This link is the part of the process that ensures that you get your cashback reward from the retailer.
How do I receive my cash back?
Once you complete your purchase via the Dell website, the tracking information contained in the link alerts both Dell and the cashback website that you are owed cash back on the sale. You will still pay the full purchase price on the Dell website - so lets imagine the PC costs £600, you would pay Dell the £600.
Once the sale is complete, Dell will be notified that cash back is owed to the cashback website. In turn, the cashback website will display the commission on the sale (in this case 6% of £600 so £36) as “pending” in your account. This is because Dell have some time to cancel the transaction (due to fraud, stock shortages or if you yourself decide to cancel your order).
Once Dell validate the transaction, the money (£36) will be released to the cashback website and will now be available to withdraw into your bank account, paypal account or via cheque.
Why do retailers pay cash back?
Internet shopping is fiercely competitive and online retailers must be constantly offering the best deals and rewards in order to ensure loyalty from their customers.
Cash back websites traditionally enjoy high Google rankings for key search terms that retailers want their customers to find them under and are therefore able to send hundred of thousands of users to the retailer. To encourage the cashback site to send the traffic to their website instead of to a competitor, the retailer will pay the cashback site a commission on the sale, which is in turn passed to the customer in the form of cashback.
How do the cashback sites make a profit?
Top cashback sites generate sales of hundreds of millions of pounds each year for internet retailers. Different cashback sites operate on different revenue models, but some of the most common include keeping the first £5 of a users earned cashback as an admin fee, or keeping back 5-10% of the commission earned from the retailers and paying the remaining 90-95% to the customer.
There must be some catch?
Again, the answer is no. The only restrictions are those the cashback sites set in terms of minimum payout levels, but with just one big-ish purchase you might exceed this in one go.
Finally, there’s no limits on the amount of cashback you can earn with cashback sites and with 98% of retailers you can make repeat purchases and get cashback every time!
Cashback sites are free to join and there is no catch. They are simply a response to the increasingly competitive nature of internet shopping and should be considered a marketing tool by retailers to encourage loyalty amongst their customers.
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