Debit card cashback

Debit card cashback (also known as cash out in Australia and New Zealand) is a service offered to retail customers whereby an amount is added to the total purchase price of a transaction paid by debit card and the customer receives that amount in cash along with the purchase. Debit card cashback is offered either by various banks only to some card holders or by companies like VISA, MasterCard or American Express. For example, a customer purchasing $18.99 worth of goods at a supermarket might ask for twenty dollars cashback. They would pay a total of $38.99 ($18.99 + $20.00) with their debit card and receive $20 in cash along with their goods.

This benefits the store as it reduces the amount of cash banking the store has to do. Many customers find it a useful way to obtain cash as it avoids them having to use a cash machine, which may incur additional fees.

The idea was originally that of British retail chain Tesco in order to reduce the amount of cash banking the stores needed to carry out, the customer service aspect being a side effect of this.

The service is offered by both banks and merchants in countries such as the United States, United Kingdom, Republic of Ireland, Belgium, Germany, Sweden, Norway, Canada, Poland, the Netherlands and Australia because of the fee structures in use in these countries:

The combination of these two factors means that the retailer can save money by offering the cashback service. It does not cost the retailer more in commission to add cashback to a debit card purchase, but in the process of giving cashback, the retailer can "offload" cash which they would otherwise have to pay to deposit at the bank.

The services is restricted to debit cards where the merchant pays a fixed fee for the transaction, it is not offered on payments by credit card because they would pay a percentage commission on the additional cash amount to their bank or merchant service provider.

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Wikipedia