Why Cashback Is a Cornerstone of the Evolution of FinanceBy Chiara Sheldon | Mon, 04/25/2022 - 16:00
Digitization around the world has accelerated significantly during the past two years, and the financial sector is an important example. In fact, a KPMG study shows that in developed markets, the level of digitization of banking users reached 60 percent in comparison to the 35 percent registered before COVID-19.
Mexico is an example of this. Currently, according to Statista, there are 56 million digital banking users in the country. They make bank transactions totaling nearly MX$80 billion (US$4 billion) a year.
Alongside this digital trend offered by traditional banks are fintech, a sector that is growing in Mexico. In 2021, the industry grew 16 percent, according to a report by Finnovista and Banco Interamericano de Desarrollo (BID).
Although the appearance and growth of these types of companies that use technology and the internet to offer financial services is changing the way users manage their finances, they should not pose a risk to financial institutions.
In fact, 75 percent of these companies and banks believe that collaboration is the best way to generate benefits for both parties and for the final consumer, according to KPMG.
The question that arises in this scenario is: what solutions can help link both players? The answer may lie in cashback.
First of all, this type of reward strategy based on reimbursing the user a percentage of their purchase directly to their debit or credit card without time or trade limits, increases user transactions. Unlike other loyalty programs, it is a direct refund that does not require additional applications or the use of a different card.
In the same way, fintech companies can benefit from it and generate greater engagement with those who decide to buy and transact with the products they offer.
Let's imagine that users who access these companies in search of solutions to speed up and simplify their payments, access to loans, digital wallets, among others, notice that they can also obtain a direct refund in their bank account for using these tools.
For example, a customer enters a department store and decides to pay with his card issued by a fintech. Discovering that each purchase refunds a percentage to his or her account, the customer will be motivated to return to that store and, therefore, the average ticket will increase with that payment method.
Chiara Sheldon is co-founder and COO of REWORTH. She is in charge of offering merchants, entrepreneurs and financial institutions the tools to grow their business through technology. Sheldon graduated from international management at Ecole Hoteliere de Lausanne in Switzerland and has extensive experience in various sectors, ranging from restaurants, hotels to NGOs and, of course, finance.