Cash Back Debit Card Transactions: A Merchant’s Guide

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( — July 20, 2022) –The retail world can be challenging. Only merchants handling brick-and-mortar stores know that offering more convenience and add-on services makes it easier to build customer loyalty and a solid reputation. One major benefit that many  retailers provide is offering cash back  on different transactions made with debit cards. These cards also  work great to help you get out of auto debt conveniently. 

Most customers enjoy the benefits of getting cash back without any added fees, but providing cash back to customers comes with various responsibilities. Are you aware of the process behind debit card cash back transactions? And what do merchants need to know  before they start providing cashback? The grocery store was the first type of store  that started offering  customers cash back on their debit card purchases. Still, not many establishments provide this  service. Or,  if they do provide this convenience to their customers, they charge additional service charges. 

For most merchants, the value that offering cash back  adds to their customers’ experience often outweighs the minor increases in labor and the costs involved on the merchant’s side. . Merchants do not need to follow some different set of rules that the card networks impose for cash back debit card transactions. Undoubtedly, the cashback card providers  will watch for  fraud and abuse, so the merchants need to ensure that they meet the security requirements. Further, they need to keep up with the proper  reporting that is essential for cash back  transactions to occur safely. 

How does a  debit card with cashback work?

When a customer requests cash back, the merchant charges an additional amount for the total transaction amount, then provides the customer with an equal amount of cash from the register. Cashback is only given on debit card transactions, not on credit card transactions. . 

Note: Merchants can decide on the amount they want to offer, but there are maximum upper limits. Those are set up by the card networks, which also vary from region to region. 

On the back end of the transaction process, cash back needs some special handling, and this means that the merchant’s payment terminals should have cash back functionality. It must be efficient enough to keep track of the normal transactions and the cashback amount separately so it is easier to identify the cashback transactions in authorization and clearing messages. They should be efficient enough to handle the issuer’s responses regarding cashback services. 

Why should merchants provide cashback?

There are numerous benefits linked with offering cash back on debit card transactions, and those include reducing cash on hand, offering customer service, and meeting  the customer’s expectations. The idea of debit card cashback was first started by the  British supermarket chain Tesco. According to Tesco, the main reason for the practice was that it reduced the amount of cash that the store employees had  to count at the day’s end. 

Of course, offering cashback was a huge challenge in the days when non-cash payments were much  less common than they are  today, but for most merchants, the same reasoning usually holds true today. 

More cash on hand means there will be more security risks, more time will be spent handling it, and more trips to the bank will be needed , so it is extremely beneficial to allow customers to take the extra cash  off your hands. 

These days, however, the primary reason to offer cash back is to meet the customer’s expectations. The  importance of offering cash back depends on the business type. If a merchant operates a small hobby shop, for example, they will probably  never be asked for cash back. 


Cash back debit card transactions provide merchants with a safe  and low-cost way to provide a valuable service that can save their customers from paying high fees. Also , the customers appreciate this service  because it can help  them to pay off their debts. Often,  customers worry about how to pay their car off faster, and a  rewards debit card can help them to deal with this  situation. 

With Paydown Rewards Debit Mastercard®, you can take advantage  of 15% cash back. Additionally, you can get 3% cashback to your account for purchases of gas. Evolve Bank, Member FDIC, issues the Paydown Rewards Card. The card is a prepaid debit card, which can be used everywhere Debit Mastercards® are accepted