Cashback websites: how do they work?

Swagata Sen Swagata Sen and the bike she bought from Quidco

Swagata Sen likes her home to look good.

In particular, she likes fancy china and plates, and is happy to show off her latest purchase.

She ordered a platter online, and took it out of the bubble wrap excitedly.

She bought that item, and some more china, toiletries and a bike, on a cashback website so she is expecting about £14 to be paid back to her.

But Ms Sen might have to be patient. It will take up to four months for her to be paid.

Money for nothing?

Cashback sites are a simple idea. Instead of going directly to a shop, you access a retailer's online store through a link from a cashback website.

You still receive your item directly from the retailer, but you also get some money from the cashback website.

It is often a percentage of the total price you paid.

The sites have links to retailers of everything from groceries and toiletries, to insurance policies and broadband deals.

But Ms Sen has not actually had any money back yet.

"I thought it was going to be as easy as one-two-three, just make the purchase to the website and get the cash back the next day," she said.

"But that didn't happen. It's been well over a month and I'm still waiting for it."

Ms Sen thinks the website is not clear enough about how long that wait will be.

"I have no idea how long it's going to take me to get the cash back," she said.

Clear and transparent

She went through one of the biggest cashback sites, Quidco.

Start Quote

On every single merchant page, we've got statistics that show the time it takes for those transactions to be paid out”

End Quote Andy Oldham, Quidco.

It says it has more than 2 million members in the UK, and that the average user can make £262 a year.

That is small change for its more committed users. Quidco says more than a hundred of them have made over £10,000.

But, like all cashback websites, its customers can face long waits for their money to start coming in.

Andy Oldham is the company's managing director and said every attempt is made to be clear and transparent.

"That's the whole ethos of the site," he said.

"On every single merchant page, we've got statistics that show the time it takes for those transactions to be paid out."

For example, with the bike Ms Sen bought, the information about the length of time is displayed underneath the deal.

"Not prominent enough"

We pointed this out to Ms Sen, who said she had never noticed the warning before.

Andy Oldham of Quidco. Andy Oldham of Quidco may revise the way his site displays some of its information.

She thinks that four months is too long to wait for her money.

"It's right down the bottom of the page," she said.

"Look how light the shade of the font is. It's just not prominent enough. They need to make it clearer," she added.

Despite all this, she says she will carry on using cashback websites.

"My attitude is, it's better than getting no money back at all," she said.

Quidco's Andy Oldham said he would take Ms Sen's feedback on board.

He admitted there was "quite possibly" an argument for rethinking how this information is shown on the website.

Wait to be paid

Mr Oldham maintains that it is impossible to give an average waiting time, because it depends on different retailers and products.

Start Quote

Don't just focus on the cashback deal. It's got to be the right deal or buy in the first place”

End Quote Sarah Pennells

So, if you are buying something like food, that will be consumed quickly, you should be paid relatively quickly.

On the other hand, if you book a holiday six months in advance, you will not be paid until after you come home.

Mr Oldham says it was important that customers realised that cashback arrangements do not pay out immediately.

"We're very much dependent on the retailer paying us the advertising commission before we pay it back to the consumer," he pointed out.

Another site, TopCashBack, says it works hard to manage consumers' expectations about how long it takes to get their money.

But on average, those customers may have to wait 12 weeks for their money to clear into their accounts.

Good deal?

There are other things to be aware of if you sign up to a cashback website.

Sarah Pennells Sarah Pennells advises making sure the items are good value, regardless of the cashback on offer.

Some, like Quidco, charge an annual fee while others take a cut out of your commission.

Personal finance expert Sarah Pennells, from the website Savvywoman, says there are dozens of sites to pick from, so it is important to shop around to find the best one for you.

"The first thing is to look at how much cash you're going to get back on the various deals and secondly, look at how they're going to pay you," she said.

"Some pay by cheque, others by bank transfer, some ask you to set up a PayPal account.

"The last thing, and possibly most important thing, is don't just focus on the cashback deal. It's got to be the right deal or buy in the first place," she added.

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