Why Paper Checks Continue To Dominate Online Rebates

Checks are still used for 75 percent of rebate payouts, but the tide may finally be turning. Online rebate providers are experimenting with new payout options as they look to entice customers, and satiate their need for instant pay. In the latest Disbursements Tracker, Craig Cassata, president of Mr. Rebates, and Kristen Gall, general manager at Rakuten Rewards, discuss with PYMNTS how new payout methods like PayPal and credit rewards points are starting to make inroads.

Offering purchase rebates to customers can create attractive incentives for retailers looking to improve their conversion rates. A recent study found shoppers are 75 percent more likely to make purchases if offered such perks, but even those enticed by rebates do not have kind words for payout frictions. Lengthy disbursement wait times can undo retailers’ progress with them, and few payment processes take as long to complete as physical checks.

Paper checks are thriving in the online rebates world, though, despite consumers growing more familiar with options like one-click ordering. Checks are both slow and costly, but they still make up 75 percent of payments sent by online rebate sites.

PYMNTS recently spoke with Kristen Gall, general manager of cash back and shopping rewards company Rakuten Rewards, and Craig Cassata, president of online rebate site Mr. Rebates, about checks’ role in online rebates, and why they are unlikely to disappear — regardless of their obvious payment detriments.

Online Disbursements And Why Checks Are Still Hanging On

Rakuten continues to see higher usage of checks for rebate payouts than Mr. Rebates, with nearly three-fourths of its disbursements being mailed out as physical checks.

“The vast majority of our members still choose a big, fat check because there’s something tangible and very, very brand-appropriate about it,” Gall said.

Rakuten’s “big fat check” tagline remains a key branding mechanism, she explained, adding that having that physical connection with brands is still important to customers used to online shopping.

Check payments are popular, but no longer hold the top slot for Mr. Rebates’ customers. The site currently offers users multiple payment options, including check disbursements, PayPal and sending funds to Amazon accounts. It introduced PayPal in 2005, and sees higher usage of it for rebate payment collection, Cassata said, noting that it is about twice as popular as checks.

“One of the reasons we do have higher PayPal usage is [our] international customers,” he explained. “We don’t disperse checks outside of the U.S. and Canada, so PayPal just levels the playing field on that one because [the payment] gets converted to their currencies, … and they can still use our site.”

Rakuten allows consumers to receive their rebates via PayPal as well, which Gall said accounts for approximately 25 percent of such disbursements on the site. It also added PayPal in 2005, and the share of consumers using it has since remained consistent at 25 percent.

“People choose checks with us because, initially, your very first welcome payment is mailed in the form of a check,” she said. “There’s something really fun about it, and we make it sort of a delightful experience. PayPal isn’t as delightful. PayPal is just a little bit more transactional.”

Checks are not immortal, however, and digital disbursements may increase for Rakuten in the future. The company also allows its customers to cash out via gift cards, an attractive option for merchants, as such cards ensure recipients will spend their money only with issuing retailers. Gift cards currently account for approximately 2 percent of Rakuten’s total disbursements.

Both companies are still experimenting with new ways to send rebates to customers. Mr. Rebates recently unveiled Amazon support, and 15 percent of its disbursements are now sent to customers’ Amazon accounts. Rakuten is planning sitewide support for American Express credit card points, which it hopes to roll out by the end of October 2020. The latter is also considering adding Venmo and other popular payment apps.

“We’ve talked about Venmo,” Gall said. “There’s a large degree of overlap between the PayPal audience and the Venmo audience, so it’s not like you buy a ton more reach with Venmo. Definitely, there is consideration for [questions like], ‘How do we broaden it to the point that every single payment platform is effectively registered on our site?’”

However, Venmo would be the next method Rakuten added if it were looking to offer a new one.

“In terms of what it would buy right now, it’s not going to buy us a huge amount of engagement or a differentiated member value,” she said. “But, I do like the idea of these other partnership opportunities.”

Adding yet another form of payment would only bring frustration to consumers, as far as Mr. Rebates is concerned.

“We don’t want too many options in the sense that [we] don’t want to confuse users,” Cassata said. “You know there [are] sites out there that will give you 10 different options for payouts, [but] in my view, simplicity is a good thing. That [complexity] just confuses the user. You’re giving too many options for them to even understand how to cash out.”

The Future Of Checks In Rebates

Gall and Cassata agreed that customers’ preferences are key considerations when removing checks or adding new rebate disbursement methods.

"There is an opportunity in the future for something like that, ... where you decide how you get paid based on what’s important to you,” Gall said. “But, at the end of the day, the most important factor for [Rakuten] members is, effectively, that we’re giving out cold, hard cash.”

This reliance on cash is subject to change with younger generations, of course. Both Rakuten and Mr. Rebates will be keeping checks in play for the foreseeable future, as will other online rebate sites.

“I don’t see [checks] being ... removed for a long time,” Cassata said. “It’s definitely an antiquated system, especially when you look at how banks process [them] and such, because there’s a bunch of fraud controls in place [or] because of how easy [checks are] to counterfeit. But change takes a long time. My kids barely know what a check is, so I think when they get older, it’s going to become passé. But I don’t foresee anything even in the next 10 to 20 years. … I don’t think it’s fair to the other generations where checks are something they grew up with and are comfortable with.”

How important paper checks will continue to be for rebates is unclear, meaning issuing sites and partner merchants will need to keep careful eyes on customers’ evolving preferences.



New forms of alternative credit and point-of-sale (POS) lending options like ‘buy now, pay later’ (BNPL) leverage the growing influence of payments choice on customer loyalty. Nearly 60 percent of consumers say such digital options now influence where and how they shop—especially touchless payments and robust, well-crafted ecommerce checkouts—so, merchants have a clear mandate: understand what has changed and adjust accordingly. Join PYMNTS CEO Karen Webster together with PayPal’s Greg Lisiewski, BigCommerce’s Mark Rosales, and Adore Me’s Camille Kress as they spotlight key findings from the new PYMNTS-PayPal study, “How We Shop” and map out faster, better pathways to a stronger recovery.