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Taking Cash-Back Rewards To The Next Level

Cash-Back Rewards

As perks for consumers go, cash-back offerings remain the leader of the pack when consumers are choosing credit cards. In the U.S., 13 percent of adults have an airline or hotel credit card, and 12 percent have a general travel rewards credit card, according to surveys by CreditCards.com and YouGov Plc. Cash-back cards, on the other hand, are held by 43 percent of American adults.

The challenge with offering cash back, however, is distinguishing one cash-back offer from another, in ways other than simply upping the amount of cash back offered to consumers. Businesses and issuers can only give back so much cash before doing so ceases to be a profitable undertaking. 

So how to offer up cash-back rewards that are sticky for consumers, but don’t rely on offering back ever-escalating amounts of cash?   

Dosh Doles Out Rewards By Connecting Brands And Cards

Dosh is an online cash-back rewards app that built its business model on creating a connection between retailers and brands — Nike, Toms, Gap, Walgreens, Walmart, Target and Sephora are all partner firms — and payment card providers like Visa and Mastercard. Dosh users, upon creating an account, connect it to their card of choice. After that point, the users get cash back whenever they shop at that brand — funds that can be sent to a user’s bank account, PayPal account or to the charity of their choice. 

Dosh itself makes money by taking an unspecified cut on each transaction. 

The shopping startup has gained some strong traction so far — ranking as number one among U.S. shopping apps at one point during the holiday spending period, and handing back about $50 million in cash back to its users during that time period. The service also now has 3 million card-linked subscribers, more than 150,000 retailers and brands signed up to its platform and the firm recently raised $40 million in new funding — bringing its total fundraising to $96 million, including both equity and debt. 

Going forward, the firm will be further expanding its solutions to push targeted offers to users —  guiding them to what they might be most likely to buy, or using increased rewards to entice consumers into a reach purchase.

The firm’s plan is to use cash-back rewards to disrupt the traditional advertising industry. The company believes that as a direct incentive, cash works better than advertising and because of Dosh’s connection to card providers it is easier for it to trace an offer to purchase directly.

“When you think about advertising over the years, at first all you had was radio and TV and print with little attribution,” Dosh Founder and CEO Ryan Wuerch said in an interview. “Now digital gives you clicks and impressions, but true attribution is when you get to the consummation of the purchase, which is what we are able to show. The tech that we built and continue to build enables us to understand consumers.”

Dosh at this point is a purely physical retail targeted concept — and as of now Dosh has no plans to enter into eCommerce.  

“Our goal is to drive consumers into stores, and we have found that the cash stimulus really does create a change in consumer behavior,” he said.

Crypto Cash Back For Media Consumption

There are many ways to generate cryptocurrency — buying, selling, trading or mining tend to be the most popular ways to come by it. Those methods, however, all involve time, risk and expense — limiting factors for all but the most interested or committed. 

But if one could generate cryptocurrency by watching movies? Well, that might just be a mining method the average person can get behind.

At least that is the hope underlying U.S. startup TaTaTu — a firm that bills itself as a social entertainment platform that uses crypto cash back as a reward for engagement.

TaTaTu is basically a combination social media/ content streaming business model that offers subscribers “premium” video content and rewards users with crypto tokens when they watch that content. The company notes that it sells advertisers TTU tokens, the brand’s blockchain-backed currency, and then shares those tokens with viewers based on their viewing habits. Users are additionally given about $50 in TTU tokens for signing on.

Handing viewers monetary incentives to boost traffic is far from a new strategy — though it is not one that has a proven winning use case in the market as of yet. TaTaTu believes, however, that the uniqueness of its blockchain-based offering as the backbone of its loyalty play combined with “high-quality original content to attract new users,” will be its secret ingredient that makes this recipe work at scale.

“The initial interest for TaTaTu has been exceptional and we are continuing that momentum into our beta phase with the largest cryptocurrency giveaway in history,” said Andrea Iervolino, CEO of TaTaTu Enterprises. “TaTaTu will be a social platform whose value is shared by everyone that participates and will continue to grow as more and more people join.” 

Capital One Feeds The Foodies With Cash Back

Consumers have to eat — that is one of the few constants in commerce — and Capital One in August 2018 decided to pitch its cash-back offering to the foodie crowd with its Savor Card.

The card is designed to reward customers for dining out and entertainment purchases with a 4 percent cash back bonus and 2 percent back on groceries. 

“When we asked people to share what matters most to them, we heard repeatedly that food and dining are an important part of their lives. We created the Savor Card to give customers a simple way to earn more when they are doing what we know they love. Whether it’s cooking a meal with family, enjoying coffee with friends or celebrating a special occasion at a favorite restaurant, the Savor Card helps make life’s moments more rewarding,” said Emilia Lopez, managing vice president of U.S. Card at Capital One.

 Savor cardholders earn a $500 cash bonus once they spend $3000 on purchases within the first three months from account opening.

Amazon’s Visa, Whole Foods And Tying The Prime Ecosystem Together

About a year ago, Amazon rolled out the first of what would be many advanced benefits for Prime customers shopping at Whole Foods — specifically those carrying the Amazon Prime Rewards Visa Signature credit card. The Visa-branded Chase-issued card, when used at Whole Foods, now nets its holder the same 5 percent they would have received had they been shopping on Amazon.com.  

Non-prime members carrying the Amazon Rewards Visa’s also grabbed a Whole Foods perk, with 3 percent cash back. 

That was Amazon’s initial cash back offering, though it proceeded to sweeten it some at various points in the year. During the Prime Day celebration, for example — between July 14 and July 17 — Visa-branded Amazon Prime Rewards card holders got a 10 percent discount on all purchases from Amazon Whole foods, as opposed to the normal 5 percent cash back.

Amazon also deepened savings for Prime members by officially making Prime Whole Foods’ loyalty program with an attendant expansion of benefits. Prime members get 10 percent off sale items and “deep discounts on select popular products” according to Amazon.   

The Good Old-Fashioned Value Of Choice

While there are no shortage of cards that offer cash back rewards — some at pretty impressive levels — Bank of America has made a simple update to its Cash Rewards card that has managed to draw a surprising amount of interest. 

Simply stated, BoA has decided to let consumers choose what their major rewards category will be in any given month. The new card rules allow cardholders to choose their 3 percent cash-back category each month from the following categories: gas, online shopping, travel, dining, drugstores, home improvement or furnishings.

Additionally, cardholders will get 2 percent back at grocery and wholesale clubs, They’ll also receive 2 percent cash back at grocery stores and wholesale clubs. Both rewards categories have a $2,500 quarterly spending cap. 

What the card doesn’t offer is a big sign-on bonus. Holders get $150 cashback if they spend $500 within the first 90 days — which is far less than the more lucrative sign-on bonuses that have been on offer the last few years.

But the card seemingly seeks to balance that out by offering rewards in “friendly family categories” like grocery, gas and — slightly unusual for a rewards offering — home improvement and furniture stores. 

More interestingly, however, is BoA allowing consumers to choose their cash-back category, when the more common offerings in the credit card industry either involve non-static categories for rewards that do not change, or changing categories that the customer has no say in. And that element of choice has drawn more attention to the middle market-pitched card, as consumer feedback indicates that Bank of America is giving consumers what they really want when it comes to cash back — their own way about when and where they get it.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the February 2019 PYMNTS Digital Fraud Tracker Report

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