Getting cashbacks from e-commerce sites, credit cards and e-wallets is quite common these days. The first question here is what is a cashback? How does it help you?
Cashback offers an interesting way to earn back some of the money you spend. The article below discusses the cashback offers in detail and the advantages and disadvantages.
A cashback is a kind of reward; given to the user for making payments through mobile wallets or credit cards. For example, a store is offering you a 15% cashback on purchase made through Paytm. Once the transactions through the digital wallet are made successfully, you get a cashback to your account that can be redeemed on your next purchase.
A cashback differs from a discount as it is an indirect way of enjoying a discount as it can only be redeemed on the next purchase. Cashbacks are generally given when the retailer or the app is tied to a third-party.
Cashback is a scheme which involves giving an extra amount back to the customer as a reward for transactions. The cashback is a certain percentage of the amount spent by the customer on the purchase. It is also an ideal way to promote brands and products and reward customer loyalty.
The cashback can be used for redemption on future expenses like electricity bills or other utility bills, mobile recharge, apparels and cosmetic purchases, purchase of groceries and other essentials. Cashback is a way that helps both the customer as well as the company. The customer enjoys money back and the company gains more customers and brand loyalty.
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Cashback is used as a strategy by many companies to gain customers and grab market share. But, the discounts plus cashback or the rewards and cashback offers have perplexed customers as they are not able to understand why such huge discounts are given on goods or services. Listed below are some of the points that help clear up the confusion and understand how cashback is an important market strategy for e-commerce sites:
As the Indian economy is one of the major economies in the World; the focus of MNCs and start-ups is directed towards capturing the Indian market and making profits. Cashback is an attractive strategy to acquire market share. Many of these companies have spent a huge amount on advertisements and marketing, without acquiring customer loyalty.
Customers choose to shift to other companies as soon as they find the prices have reduced or a good discount is offered. With cashback offers; the companies make sure they retain their existing customer base as well as acquire new customers through tie-ups.
The cashback offers ensure the customers come back to redeem their vouchers. For example, if you have a cashback of Rs 1,500 on an e-commerce site or in your e-wallet, then you would go back to the site to make an additional purchase to redeem the money.
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Digital wallets have great potential and have eased the way payments are made. Digital wallets have enabled cash transfer from the user to retailers, e-commerce sites as well as for making personal payments.
Experts believe digital wallets have revolutionized the process of making cashless payments by launching easy to use and user-friendly app interfaces. The wallets enable UPI payments and are linked to the credit/debit card or your bank account. Payments are conducted securely and safely. Digital wallets are believed to be the future leaders in cashless payments.
In India, the market leaders in this segment are Paytm and Google Pay. Once people get used to making payments using these apps; there is no doubt these will prove to be the most convenient payments methods for customers. Customers do not need to carry cash or worry about small change while making payments. Cashback on these apps is the icing on the cake. You can pay conveniently as well as receive cashback on payments. Cashback on digital wallets helps improve market retention and customer loyalty.
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Advantages of cashback offers:
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Cashbacks can help you save a lot of money on online shopping, payments of bills through digital wallets and purchases made at retail outlets. To earn cashbacks, you can download a digital wallet or make use of cashback credit cards.
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