How Does the CashBack Work On Debit Cards?

The retailer world is a challenging place. The merchants know that, the more they add-on services and convenience to the customer, the easier it is to build loyalty, repeat business and solid reputation. The one such offer most retailers use is cashback on debit cards.

Who doesn’t love getting cash back without added extra fees? But offering cashback brings some additional responsibilities on the retailer.

1. How Does the CashBack Debit Card Process Work?

Debit card cashback is also known as cashout in countries like Australia and New Zealand. It is a service offered to the retail customer, where the amount is added to the total purchase of a transaction paid by a debit card. This amount is received by the customer in cash along with the purchase. 

Debit card cashback is offered by various banks to few cardholders or by companies like VISA, Mastercard, or American Express.

For example:  If a customer purchases goods worth $25.99 and asks for a twenty-dollar cashback, they would pay $45.99 ($25.99 + $20) with their debit card and receive $20 in cash along with the goods purchased.

2. Why Should Merchants Offer CashBack?

There are numerous advantages that accompany offering cashback on debit cards. One of them can be that it reduces the amount of cash that the employees in the store have to count or deposit at the end of the day.

But the primary benefit as we all know is that it gives a positive experience to the customers which strengthens the loyalty. This automatically leads to a positive spread about the store or company.

3. The Pros of Offering CashBack.

Providing cashback on debit cards is beneficial for both the retailer and the customer. Let us look at them in both ways.

Benefits for Retailers.

• Offering cashback for debit cards during a purchase allows businesses to convert their cash into electronic sales. This helps in reducing the amount of cash in hand.
• This also helps a business in gaining loyal customers and increasing sales.
• Due to high ATM fees, most of us don’t like to go and withdraw money from banks or ATMs. Due to this, the customer will make a small purchase with the retailer for receiving cashback on debit cards.

Benefits for Consumers.

• The consumer can receive the cash instantly.
• They don’t need banks or ATMs nearby for withdrawing money for instant purposes.
• No fee is charged and the process will be completed with no negative effects.

4. The Cons of Offering CashBack.

One of the main reasons why the retailers decline offering cashback is due to the cost. Though the merchant is not earning any profit on cashback of transaction, the receiver may still hold merchant responsibilities for the interchange fee.

5. Which Purchases Qualify for CashBack?

Consumers can’t receive cashback for all purchases, there are few transactions that don’t qualify for cashback. Each card has its own limitations for cashback. Down below, we will see the regulations of Visa cards.

• A consumer can only receive cashback only if the issuing bank gives the permit.
• Cashback is provided only if an electrical terminal is used in the transaction process. Any transaction made using a manual imprint machine disqualifies for cashback.
• Purchases must be made to receive cashback.
• Consumers can only receive cash back with a debit card, but not credit cards.

6. What are the CashBack Minimums and Maximums?

The cards of Visa and Mastercard don’t specify any minimum amount to those who are interested in receiving cashback. They can use their desired amount for the cashback or purchase. However, there is a maximum amount limit for cashback.

The maximum cashback differs for each card based on the region. For example, Visa card cash back limits to $200 in most parts of the world.

7. Debit Cards That Pay Cash Back Rewards.

1. Bank of America Visa Debit Card.

The Bank of America Visa Debit Card is a standard debit card in many ways. It offers various cashback deals for the customers from various merchants.

Rewards: Can earn upto 15% cashback from selected merchants.

Monthly or Annual Fee: $0

The benefit of these Debit cards is you earn a coin every time you use a BankAmeriDeals offer. If you collect 4 coins in 60-days, you are eligible for a $5 cash award.

2. Empower Debit Card.

It is a personal finance app that offers cashback  on debit cards.

Rewards: You can earn upto 2% cashback

Monthly or Annual Fee: $0

You can earn 1% cash back on your first $1,000 purchase in each month. So you can earn $10 cashback every month, which means you can earn a cashback of $120 in a year.

Moreover, The Empower checking account requires no minimum balance and no foreign transaction fees or no insufficient fund fee.

3. Discover Cashback Debit

Discover Cashback Debit card gives you $30 back from your purchase per month, which means a maximum reward of $360 a year.

Rewards: Earn 1% cash back on up to $3,000 each month.

It has free fee access to more than 60,000 ATMs. If you have an eligible Discover Credit card you will be able to transfer cashback from your card to your checking account. The rewards also will not be expired as long as the account is kept in good standing.

4. Axos CashBack Checking Account.

Axos bank offers a cashback debit card which reimburses for domestic ATM fees.

Rewards: You can earn upto 1% cashback if you maintain your balance of $1,500. If it drops below $1,500 then you might receive only $0.50 cashback.

This bank states that you can earn a maximum cashback of $2,000 per month for purchases that require a signature and in few included categories.

5. American Express Serve Cash Back Prepaid Debit Card.

It is a prepaid charge card which operates and looks like a debit card. Except the fact that it is not connected to a regular checking account. It claims that it is the only cashback debit card that offers unlimited 1% cashback.

Rewards: Earn unlimited 1% cash back

Monthly or Annual Fee: $7.95 per month

This cashback offers you an immediate cashback unlike other cards, which take a month to credit the cashback amount. It also includes free withdrawals at moneypass ATMs, partnership with money transferring app Ria, and 24/7 customer service.

6. PayPal Business Debit Mastercard.

This works best if you have a business or a freelancer gig. It gives you instant access to funds both offline and online.

Rewards: Earn 1% cashback when purchases are charged as a credit on your debit card. 

Monthly or Annual Fee: $0

Once you are signed into the PayPa business account, apply for a business debit card. This card can be used anywhere, to earn cashback. You will get cashback at the beginning of each month.

With this card you can convert your non cashback accounts into cashback. It requires no ATM fees and is a MoneyPass ATMs.

8. Conclusion:

Cashback debit card transactions provide merchants a safe and low cost way to offer valuable services that can save customers from hunting ATMs or paying high fees.