The term cash back, often written in a single word cashback, means "cash back".
Today, it refers to discounts offered online at partner merchants. This discount is applied after the purchase, with a refund made to the consumer, usually to an online account on the cash back site.
This percentage varies from bank to bank but generally ranges from 0.2% to 5% in some very specific cases. Depending on where you shop with your credit card, the cash-back percentage will be different.
For example, the Apple Card (not yet available in Switzerland), offers a cashback of 2% when you make a purchase with the virtual card but 3% when you buy on Apple platforms (Itunes, AppStore etc...).
How does it work?
Typically, credit card providers tap into the interchange rate to provide cash back to their customers.
As a reminder, the interchange rate is a kind of "commission" that the merchant's bank (the one selling a product or service) must pay to the customer's bank (the one buying) when a card purchase is made.
In Switzerland, consumers often have access to a lower cash back than in other countries because our interchange rate is relatively high.
Who offers Cashback in Switzerland?
More and more banks are offering cashback to their customers, here are the main ones:
Swisscard, in partnership with Visa and AmericanExpress. For the Visa card the return of money amounts to 0.2% (no limit), with the AmericanExpress, it is 1% that is credited to your account, however the Visa card is accepted everywhere, which is not the case with the AmericanExpress.
Postfinance also offers cashback on all its cards (even prepaid cards). For the standard card, the return on purchase amounts to 0.6% in the 1st year, then 0.3% thereafter. For Gold and Platinum cards, the cashback amounts to 1% in the 1st year and 0.5% for the following years.
Cornercard offers 3 cards: classic (0.5%), Gold (1%) or Platinum (1.5%). The difference with other cards, the disadvantage even, is that money refunds are not returned directly to your account. They must be withdrawn via their customer area and you cannot withdraw less than CHF 25 at a time. Last but not least, all the vouchers obtained through the Cornèrcard Cash-back are only valid for one year, after which you can no longer claim them.
TCS Travel Mastercard Gold credit cards (in partnership with Cembra Money Bank) offer to credit you with 1% of the amount of purchases made with the card.
Revolut revolutionized the banking world when it arrived in 2016. In addition to many exchange rate benefits (free of charge), Revolut also offers cashback of up to 0.1% in Europe on any purchase with the physical card and 1% outside Europe.
Is it really beneficial?
Yes, cashback is therefore an interesting way to save money, for example it can be interesting to put everything you receive with the help of cahsback into a savings account, if you use your credit card often. Almost all banks today offer a cashback solution, so it's up to you to decide which bank you want to turn to.
After that, in principle, the promise is there but in reality it is nothing more or less than a "disguised" way to offer discounts on your purchases. Psychologically, people feel like they're getting a better deal when they receive money in their account rather than reducing the amount of a purchase in the first place.
It's also a way to encourage customers to spend with their credit card.
