Merchant-funded cashback: loyalty the merchant pays for, inside the payment
Resources · Concept
Merchant-funded cashback is a reward paid, fully or in part, by the merchant where the purchase happens, to win customers, visits or basket size. It can run in a bank's loyalty program or in the merchant's own program, and be credited days later, as in card-linked offers, or inside the payment. Qurable decides it inside the authorization, in ~150 ms, and records the merchant's and the bank's share on a double-entry ledger.
- CardAuthorizes USD 80
- MerchantFuel station
- Customer< 50 ms p95
The campaign
- Rule10% in the category
- Funded by50% merchant · 50% bank
- BudgetCap per campaign
- 0 msAuthorization arrives
- ~150 msCashback decided
- CloseEach party's share
Banks and fintechs, in production
Our banking and fintech clients already deliver cashback at payment with Qurable.
Pomelo, Santander Peru, Banisi and Konfío, among others. With Pomelo, banks, fintechs and companies that issue cards turn on loyalty and cashback without a separate technical project.
- ~150 msReward decisionInside the authorization
- < 50 msMember identificationp95, server-side
- 99.5%SLACommitted availability
- 18MMembersIn programs running on Qurable
Key takeaways
- Merchant-funded cashback is paid, fully or in part, by the merchant of the purchase.
- Inside the payment, it is decided in the authorization and shown on the same receipt.
- Each share is recorded per campaign; results are measured against a control group.
The difference
Cashback the bank pays or cashback the merchant pays.
Both give money back to the customer, but each pursues something different: the bank rewards card usage; the merchant pays to bring purchases to its store. Many campaigns combine the two.
| Bank-funded | Merchant-funded | |
|---|---|---|
| Who pays | The bank or issuer, from its rewards budget | The merchant, fully or in part, campaign by campaign |
| What it aims for | Card usage and top-of-wallet preference | New customers, more visits or larger baskets at the merchant |
| Where it applies | On every qualifying card purchase | At the merchant, brand or category in the campaign |
| How it is controlled | Caps and budgets of the bank's program | The merchant campaign's own caps, budget and dates |
| How it closes | Within the bank program's accounts | With the merchant's share recorded per campaign, ready for clearing with the bank |
How it works
What each party needs for the campaign to close.
The merchant wants to choose where its money goes and see what it returned. The bank wants to add merchants without manual processes. This is how each side works inside the payment.
Where it applies
Rules by merchant, category, amount or customer segment.
How much it puts in
Caps, budgets and dates per campaign, enforced before the reward is given.
What it contributed
The merchant's share of every purchase and every campaign, recorded on the ledger.
What it returned
Visit frequency and basket size of rewarded customers, compared with a control group designed in the pilot.
Adding merchants
Campaigns co-funded with each participating merchant, each with its own split, for example 50/50.
Cashback at payment
Decided and credited inside the card authorization, in ~150 ms.
Clearing
Each campaign's entry and close are handled from the Qurable Manager. Qurable does not move funds.
Returns
A reversal posts an offsetting entry; if the balance was already spent, a recorded debt remains.
In the brand's wallet
The merchant can also give value back in its own program, in the same payment.
With points
The same purchase can earn cashback and then the program's points.
One member
One profile per customer, recognized in store, in the app and online.
Never blocks the sale
If the service does not respond, the sale still closes.
Who it is for
Cashback the merchant pays, by industry.
Examples of co-funded campaigns by industry. Each campaign sets its own split and caps.
Fuel retail
Cashback on fuel with the bank's card
The station network and the bank split a cashback on fuel, capped per customer and per month.
- Example
- 10% on fuel, 50% each.
Restaurants and QSR
Cashback to come back this week
The chain pays cashback on the days or hours it wants to fill, and the customer sees it in the same payment.
- Example
- Cashback on weekday lunches.
Retail and apparel
Cashback above a minimum basket
The brand pays cashback from a purchase amount, only for the segment it chooses.
- Example
- Cashback above a minimum basket, for new members only.
Banks and fintechs
A catalog of co-funding merchants
The bank adds merchants to its program and each pays its share of the cashback, with the contribution recorded.
- Live
- Cashback at payment with Pomelo, Santander Peru, Banisi and Konfío.
What to measure
Five numbers to know if the campaign worked.
The merchant pays to sell more. These numbers show whether it did and what it cost.
Cost per reward
What the merchant paid per rewarded purchase and across the campaign.
Each party's share
What the merchant put in, what the bank put in and what is pending clearing.
Incrementality
How much purchasing changed against a control group, designed in the pilot.
Frequency and basket
Whether rewarded customers came back more often and spent more.
Returns
How many rewards were reversed and how much remained as recorded debt.
With Qurable
Merchant cashback decided inside the payment.
Qurable decides the cashback inside the authorization, in ~150 ms, with each campaign's rules and budget, and records on the ledger what the merchant and the bank contributed.
Cashback at payment
Live with Pomelo, Santander Peru, Banisi and Konfío, paid by the bank or co-funded with the merchant.
See cashback at paymentAt the POS, processor and checkout
The reward follows the payment cycle: authorize, capture and revert.
Loyalty at the POS and checkoutEvery share on the ledger
The merchant's share, the bank's share and each campaign's liability, on a double-entry ledger.
See the points ledgerTransaction intelligence
The transaction, the customer profile and the campaign rules decide the reward on every purchase.
What Transaction Intelligence is
Questions
What people ask about merchant-funded cashback.
Short answers for merchants, banks and fintechs.
It is a reward paid, fully or in part, by the merchant where the purchase happens. The merchant uses it to win customers, visits or basket size; the bank or fintech offers it to its customers.
Each campaign sets the split, for example 50/50. Qurable records each party's share on a double-entry ledger, and each campaign's entry and close are handled from the Qurable Manager. Qurable does not move funds.
Purchases that would not have happened: new customers, more visits or larger baskets. That is why each campaign should be measured against a control group, designed in the pilot with Qurable, not just by counting rewards given.
Qurable decides the cashback inside the payment authorization, in ~150 ms, and records the merchant's and the bank's share. It is live with Pomelo, Santander Peru, Banisi and Konfío, and has live programs in more than 6 Latin American markets.
Yes. The merchant can give value back in its own program, in the same payment, and combine it with the program's points. With a bank, it can also co-fund the card's cashback.
Timing. In a card-linked offer the merchant also pays, but the customer gets the reward days later, when the transaction is reconciled. Inside the payment, the cashback is decided in the authorization and the customer sees it on the same receipt.
The ledger reverses the cashback with an offsetting entry and each party's share is adjusted. If the balance was already spent, a recorded debt remains.
Last reviewed
Further reading
Keep reading about cashback and payment loyalty.
The pages where each part of the model shows up in the product and with clients.
- ModuleCashback at the moment of payment
How it is decided, who funds it and how it is controlled.
- ResourceCard-linked offers vs payment loyalty
Offers credited later or rewards inside the payment.
- ResourceTransaction Intelligence
What it means for loyalty to decide inside the payment.
- IndustryLoyalty for banks and fintechs
Card cashback and points, decided at payment.
Build a cashback campaign the merchant pays for.
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