Cash back programmes originated way back in the 1990s after e-commerce started replacing the traditional way of shopping. As is clear from the term, cash back programmes focus on returning a part of the cash which the customers pay to purchase a product. The returning, however, may not be in the form of cash: they could be in the form of discounts offered at the time of the purchase itself or discount vouchers which the customers can use later to get discounts on their purchases.

Some of the online shopping portals offer points for each purchase. These points can later be redeemed for cash or for gifts which the portal may offer. However, the point system sometimes discourages the customers. Some portals require the customers to collect a certain number of points to get a particular gift and it may take them a long time to collect the required points. The cash back in the form of gifts, therefore, can sometimes prove to be frustrating for the customers.

The first e-commerce portals used to give only points to customers for each purchase made. These points could later be redeemed for gifts or discounts. This process, however, was found to be cumbersome by the shopping portals. They decided thus to transfer their task of points management to third party websites. Since the third party websites specialised in such tasks, they did not have much difficulty in managing the points reward system.

Let us now come to the advantages of the cash back schemes. The biggest attraction of the cash back schemes is of course the fact that the customers get back a part of the money they spent on a purchase in the form of discounts, gifts or hard cash. This effectively reduces the price of the commodity they buy. Secondly, the customers now have the chance to select the best cash back offers for themselves by making a comparison of the cash back deals of different portals. Also, the option of choosing the payment method is there for the benefit of the customers. They can decide whether they want a discount coupon for their next purchase or want cash credited into their bank accounts. With so many advantages, it seems the cash back system will stay and become more popular in the future.