'Cash back' websites lure shoppers

As the number of people shopping over the internet increases a new kind of portal is appearing, offering cash back on purchases made at linked online stores.

One in every 10 retail purchases in the UK is now made over the internet, according to figures just published by the Interactive Media in Retail Group.

Cheaper prices, the ability to make quick comparisons and the convenience of online shopping means increasing numbers are being lured away from the high street.

A new kind of website is capitalising on this and promises to make members' money go even further by refunding a fraction of the price each time they buy through a linked retailer.

Cash can also be earned back for activities such as opening bank accounts and credit cards or taking out insurance.

Mrs Cashback is the latest site to enter the market, but unlike some of its predecessors it is not free.

Full membership valid for one year - which will get you the maximum cash back entitlement - costs £29.95.

It pays cash back on purchases at over 700 retailers, but you will need to have in excess of £30 in your account before you can make a withdrawal.

Plus it costs £3 to gain access to any money you have earned, which is then sent to you by cheque.

'Old rope'

Speaking to BBC Radio 4's Money Box, its commercial director Chris Percival said most people cover the membership fee in the first or second transaction.

However, if you got 2% cash back on your purchase, you would have to spend £1,500 to get £30 back.

But Mr Percival felt the charge was fair saying: "It basically is there to cover quite a lot of heavy maintenance that's required for all those retailers to be set up, obviously looking after the money... and of course the need to better the deals that are featured."

He said the average cash back works out at about 7%, and he was confident people could easily benefit.

"For effectively £2.50 a month it is hard to think that people will actually be able to avoid making more money from the site," he said.

"It is not a lifestyle change, for people that actually shop on the internet, it is money for old rope."

There are several other similar websites in the UK and most do not cost to join.

Bargain hunters

Rpoints is free to join and you receive a £5 welcome bonus when you register.
It started nearly three years ago and its managing director Richard Yendall said it is the most visited site of its kind, with 70,000 registered members.

He admitted this figure was only a small percentage of the number of people shopping online but said: "It is relatively new, people do not know about it and perhaps people are distrustful of a website that claims to give them free money but in this case it is absolutely genuine."

Rpoints has over 1,500 linked retailers and Mr Yendall says it is "free money waiting for people to take for doing nothing different to what they do normally".
Members earn points as they spend which can be exchanged for cash or discount vouchers.

“ We combine the cash back facility with bargain-hunting forums ”
Richard Yendall, Rpoints

One hundred points equals £1; you can earn up to 30% cash back at the various linked stores, and the money is paid directly into your bank account.

Mr Yendall said the amount of "cash back" depends on the margins that the retailers can achieve, so it can be as low as 2-3% on electrical goods, but for goods with a higher margin it could be 10, 20, 30%.

He added: "We combine the cash back facility with bargain-hunting forums so members can discuss various bargains they find.

"It is the saving from finding a good deal in the first place combined with the cash back that gives you a good deal over all."


Another site, Greasypalm, is free to join and it credits £2.50 to your account when you register.

After this you gain access to cash back on purchases at over 1,000 online stores, where you can get up to 25% cash back on purchases.

Once you earn £25 or more, Greasypalm posts you a cheque. After your first cheque goes out, your account receives a "reload bonus" of £2.50 and you gain VIP access to additional offers and features.

Quidco is free to join and gives cash back from purchases at over 1,000 online stores.

There is an annual admin fee of £5 which is deducted from your first payout, but if you do not earn enough money then no fee is charged.

BBC Radio 4's Money Box was broadcast on Saturday, 27 May, 2006 at 1204 BST. It was repeated on Sunday, 28 May at 2102 BST.