By Karen Lynch | American Express Credit Intel Freelance Contributor
5 Min Read | September 22, 2020 in Cards
More people are shopping online than ever before – and changing the way they shop by cashing in on online portals and apps that deliver cash back.
You can receive from 1% to 10% cash back on purchases, depending on multiple variables like which portal you use, what you’re buying, and how you pay.
Other rewards deliver store discounts or points linked to your credit card.
Who doesn’t like a bargain? Or getting payback for spending you planned to do anyway? Enter rewards and cash back for shopping online.
People have recently increased shopping online in record numbers: By one estimate, global retail e-commerce transactions grew 81% from May 2019 to May 2020.1 At the same time, people have been changing the way they shop online, actively seeking out rewards and cash back from a growing array of mobile and web-based options. Among these are online shopping portals, cash back apps, digital loyalty programs, and rewards and cash back offers linked to credit cards. Many work in stores as well as online.
Here are some of the current trends in rewards and cash back for shopping online.
Online shopping portals aggregate access to a variety of retailers and offer rewards when you do your shopping through the portal. To use an online shopping portal, you sign up as a member, usually at no charge. Then you receive from 1% to 10% cash back when clicking through to retailers from the site or its mobile app.2
Just how much you get depends on the product you buy, the portal you use, the day you’re shopping, and other factors. But it does add up: One of the largest online shopping portals reports 12 million U.S. members, who it says have earned over $1 billion in cash back from 2,500 partner retailers.3,4 The portal shares the commissions it receives from retailers on each sale, and distributes members’ payments via a digital payment platform, old-fashioned paper check, or other means.
Some of these cash back sites and apps require more of shoppers’ time and attention than others. To minimize your “overhead” effort, some apps offer extensions to your web browser that automatically alert you of cash back opportunities when you’re shopping at the site of a favorite store.5 Among different generations of shoppers, millennials are the most likely to download and use cash back apps, and 45% have done so, according to a recent report.6
There are an increasing number of variations on the online shopping rewards theme, with some rewarding you for participating in market research surveys, or as you submit receipts, watch videos, and scan barcodes in-store. Among online e-commerce portals, participating stores and brands can vary from one service to another, and also change over time. In place of cash, shoppers might also accumulate rewards points, potentially accumulating enough to qualify for store discounts or gift cards to leading brands. Arrangements between the portals and some credit cards may give you the option of converting your shopping rewards into points or miles on your card.
Some airlines have their own portals that let you shop at hundreds of stores to earn miles – and get additional miles for using their branded airline credit card when you buy. Companies in the business of supplying coupons and promo codes for online discounts have also expanded into cash back and other rewards.
With other portals, you can opt to give rewards to charity when you shop, instead of harvesting the rewards for yourself. Still others reward you for shopping at local small businesses – see “Local Small Business Shopping Surges Online” for more. With so many options, there are even online “monitors” that continually update available rewards for various stores from a range of portals, apps, and credit cards.7
Online shopping portals aren’t the only way to go for earning cash back, points, gift cards, and other rewards. Credit cards have long offered such rewards, usually as a statement credit, with cash back percentages ranging from 1% to 6%. For more, read “What Is Cash Back and How Does It Work?” Some shoppers find they can combine points from rewards credit cards while spending on cash back portals to increase their savings.
Meanwhile, loyalty programs have evolved over the past 20 years, from the old paper punch card approach – like buy 10 to get one free – to plastic membership card to key fob to smartphone apps.8 A major department store chain recently upgraded to four levels of rewards, depending on customers’ spending: All customers receive at least 1% in rewards, and those who spend at the highest level receive 5% in rewards plus a special pass to get 25% off on any day of their choice.9
While cash back sites can earn you money, they may also increase your spending by turning shopping into a game, according to a Marketplace report.10 A survey by the Center for Generational Kinetics came to a similar conclusion, with 74% of millennials saying they would spend more money online knowing they would instantly receive 5% cash back.11 Shoppers might want to track their spending closely.
It’s also a good idea to research portals in advance to be sure of their legitimacy and to understand how quickly they pay out, whether they require a certain threshold of earnings before paying, and whether you receive your cash back as a digital payment, check, or gift card.
Cash back and other rewards for online shopping are proliferating, with shoppers using web-based portals and mobile apps to earn back a percentage of their purchase price at retail sites of all kinds. The deals come at a good time, with people shopping online more than ever.
1 “81 Percent Rise in May Retail eCommerce Sales,” ACI Worldwide
2 “Cash Back Shopping Savings, But at What Price?,” Marketplace
3 “Company Overview,” Rakuten
4 “Start Shopping Smarter,” Rakuten
5 “BeFrugal: Automatic Coupons and Cash Back,” Chrome Web Store
6 “Gen Z and Millennials as Customers and Trend Drivers,” Center for Generational Kinetics
7 “The Most Viewed Stores,” Cashback Monitor
8 “Evolution of the Retail Loyalty Rewards Program,” Clarkston Consulting
10 “Cash Back Shopping Savings, But at What Price?,” Marketplace
11 “Gen Z and Millennials as Customers and Trend Drivers,” Center for Generational Kinetics