In this article, we’ll dive into cashback incentives for crypto and show you how a certain cryptocurrency project is changing the game.
Cashback is an interesting concept, isn’t it? It is reward programs that credit card companies primarily operate where the cardholder receives something in return when they make a purchase. They are not limited to credit card companies, though. True, the term likely brings to mind credit card rewards, but they go beyond that. ‘Cashback’ also refers to literally receiving cash back during a credit card transaction at a retail store.
The bottom line is that there is a generally favourable reception to cash backs.
However, would these rewards mean anything for cryptocurrency? We are gradually seeing digital currencies becoming more and more commonplace with each passing year. Therefore, it makes sense to think about this new innovation in relation to conventional financial strategies. With cryptocurrency getting that much closer to widespread adoption, could cashback incentives be helpful in any way?
What does it mean?
The term ‘cash back’ typically refers to two types of financial transactions. Specifically, ones that relate to credit and debit cards that became increasingly popular within the previous two decades. In its most common form, it is a credit card benefit. The core purpose of this idea is to refund the cardholder a small percentage of the amount they spend on each purchase. Alternatively, multiple purchases above a certain dollar threshold.
Cash back is also a way to describe a specific type of debit card transaction. One in which cardholders receive cash back – in the literal sense, mind you – at the exact time they make a purchase. Generally speaking, it is a considerably small amount above the item cost.
This is a perk that a lot of credit card companies offer on some of their rewards credit cards. It refers to earning back a certain percentage of the money that you spend on your credit card. There are a handful of cards that even present the opportunity to earn more cash back on certain purchases. Specifically, those made by signing up for quarterly promotions or carrying out purchases via their virtual shopping portals.
With debit cards – as well as some credit cards – there’s a chance that the customer will get the opportunity to receive cash back immediately. Whether it be at a supermarket or any other location, this is a likely outcome. All the customer has to do is ask the merchant to add an extra amount to the purchase price. In turn, they will receive this additional amount in the form of cash. Providers of services usually do this as a way to allow customers to leave a cash tip. However, this practice is not technically a refund; the customer is simply charging more on the card.
When did this all begin? Well, we have to go back a couple of decades; the 1990s to be exact. There was a notable outgrowth of general rewards programs from credit card issuers and cashback programs back then. However, they did not become ubiquitous until the start of the 21st century. At that point, almost every major card issuer was now offering this feature on at least one of its products. It is basically an incentive for pre-existing customers to make use of the card early and often. In the case of new clients, it was to motivate them to sign up for the card or switch from a competitor’s.
There is a contrast between cashback rewards and traditional rewards points. With the latter, you could only use them to purchase goods, services, or gift cards that the card issuer offers. With cashback rewards, however, they are – as their name suggests – literally cash.
More often than not, they are presented to the cardholder on the monthly credit card statement. You can even apply them to purchases on that statement. Put simply, they could help with the credit card bill payment. Alternatively, consumers may receive the cashback reward directly. It could either be in a direct deposit into a linked checking account or the conventional way. In other words, through the mail by check.
On the whole, cash reward percentages range from 1% of a transaction to 3%. There are some cases where it can go up as high as 5%. This may not seem like much (5%? That’s it?), but it does not stop there. As a matter of fact, there are some transactions that actually offer double rewards through merchant partnerships. Purchases at that particular merchant can earn you more than purchases you may conduct elsewhere.
Oftentimes, credit cards will offer varying levels of cashback. It largely depends on what the purchase type or transaction level is. For example, a cardholder will likely earn 3% back on gas purchases, 2% on groceries, and 1% on other purchases. Most of the time, a special promotion may be in effect for a total of three months. During this time, spending in a specific category – be it restaurants or department stores – earns a higher refunded percentage for that specific period.
Generally speaking, it is a requirement for the cardholder to reach a certain transaction level in order to qualify for cashback. The same can be said for other benefits they wish to obtain. This is usually quite small, like around $25. However, as one might expect, it varies from card to card. There are some card companies that also allow the use of cash rewards to be for specific purchases. These include travel, electronics, and even partnership incentive programs.
If you have been keeping up with cryptocurrency, you’d know that it is gaining traction in the public eye. Be that as it may, it has yet to achieve mainstream adoption. One of the primary focal points for stakeholders in the cryptocurrency industry just so happens to be retail adoption. Projects like Plutus intend on giving the masses a way to interact with digital tokens through crypto-back and cashback loyalty rewards. With Plutus’ efforts, it may be possible to bridge the supposed gap between cryptocurrency and cashback incentives.
In recent years, we would see an array of projects launch crypto rebate programs. Ones that tailor mainly towards incentivizing retail adoption between shoppers and online merchants alike. According to various reports, Plutus is planning on an expansion of the rebates niche. They hope to extend it beyond centralized reward programs by bagging partnerships with numerous retail giants around the world.
In a blog post on the platform’s Medium account, Plutus elaborates on its plan. Their goal is to offer their users with 3% crypto-back on online purchases by way of its Plutus Card. The company says that the crypto loyalty rewards payments will come in the form of its native token, Pluton (PLU).
PLU tokens share some similarities with Air Miles or in-store loyalty bonuses. The only difference is that you typically earn them at over 400 million retailers. Plutus states its crypto-back rewards plans on decentralizing the loyalty rewards industry. In the words of one section of their blog post:
“As Plutus evolves into a fully-fledged consumer finance application with more advanced fiat capabilities, we believe our non-crypto customers will gravitate towards crypto by unintentionally acquiring our blockchain-based token.”
Setting crypto rebates aside, the Plutus loyalty rewards ecosystem also includes a cashback component. Users who manage to earn the 3% PLU crypto-back are able to stake their earnings. Doing so gives them the ability to unlock additional perks. An example of these benefits are discounts and cash backs at specific retailers. Plutus reportedly has over 20 affiliations with international brands such as Airbnb and Skyscanner. With these partnerships, this concept is plausible.
When it comes to Plutus, the inclusion of cash backs means that non-crypto customers have additional motivation to be program participants. The more who partake, the more crypto adoption will be able to gain even broader momentum among online shoppers.
Rebates & Loyalty Rewards
In a report from Blockonomi, the intersection that exists between blockchain and loyalty points programs is seeing the emergence of several projects. The purpose of these projects is to use the emerging technology as a means to democratize rebates and loyalty rewards.
A large number of crypto rebate programs are making steps toward establishing the practice of “stacking sats.” One that effectively stretches out beyond the cryptocurrency scene. In July of 2019, a digital rewards startup, Gojoy, was able to raise $10 million to help finance its crypto rebates service.
There are some platforms that are making the transition to go beyond crypto rebates. They are opting to allow users to invest their crypto-back in major tokens. These include giants like BTC or Ether (ETH). These services give users the ability to acquire cryptos from the spare change that comes from microtransactions. These can range from buying a cup of coffee to purchasing bus tickets.
So, could it help crypto?
The main question here isn’t “Is it possible to apply cash backs to cryptocurrency?” Rather, “Is cash back capable of helping push cryptocurrency closer to widespread adoption?”
Drawing from the Plutus project, providing incentives to support crypto is vital for its mainstream acceptance. ‘Cashback’ has the capacity to be one of the driving forces behind people’s decision to embrace digital currency.