Rewards are changing the way we pay

In recent years we’ve all heard about new and forthcoming payment trends and technologies that promise to change the way consumers shop and pay. (Consider the possibilities presented by biometrics and Internet-connected cars, to name but two developments that could re-shape the payments landscape.)      

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Rewards are changing the way people pay

Jul 1, 2019

Rewards are changing the way we pay

In recent years we’ve all heard about new and forthcoming payment trends and technologies that promise to change the way consumers shop and pay. (Consider the possibilities presented by biometrics and Internet-connected cars, to name but two developments that could re-shape the payments landscape.)    

In the meantime, though, it’s worth remembering that our collective habits have already changed dramatically in the past few years, with mobile payments—including proximity mobile payments—an increasingly popular payment method. Never mind that mobile payment adoption hasn’t come as quickly or strongly as many would have liked or expected, including Apple® CEO Tim Cook, who said last year that “mobile payments have taken off slower than I would have thought if you asked me … a few years ago.”1

One of the challenges, it seems, is that consumers haven’t had enough incentive to change their payment habits, which perhaps explains why some of the biggest success stories in the world of mobile payments have come courtesy of individual retailers like Starbucks®, which has leveraged the benefits of its loyalty program (points, coupons, perks, etc.) to encourage customers to use the company’s payment app at the point of sale. 

But in the past few months shopping rewards apps have begun introducing (or announced plans to introduce) in-app payment functionality, which could provide the needed incentive for countless consumers to make mobile payments a habit.

Most notably, perhaps, in late May the cash back shopping app Ibotta® rolled out Pay With Ibotta™, adding functionality designed to encourage Ibotta’s millions of devoted users to pay using the app.2

So instead of redeeming cash back offers by taking photos of paper receipts and submitting them via the app, Ibotta users now (also) have the opportunity to connect a credit or debit card to their account—the proverbial “payment method on file.”

Then, when checking out at any participating restaurant or retailer, an Ibotta user simply clicks on the retailer’s name/logo and types in the dollar amount of the transaction. In turn, the app renders a QR code on the user’s smartphone, which is presented to the cashier, who scans the code and “zeroes out” the transaction.  

From the merchant’s perspective it’s much like being paid with a digital gift card, but for the shopper there’s instant gratification, as it only takes a matter of seconds before the consumer receives a push notification or e-mail revealing the cash-back amount received (which is credited to the user’s Ibotta account and can be cashed out via PayPal® or Venmo® among other options).

To illustrate using a representative example: Ibotta is currently offering four percent cash back for payments made in-app at a large regional chain of sandwich shops, so a purchase of $8.75 results in a cash back payment of $0.35. At the same time, users have an opportunity to “stack” rewards, as Pay with Ibotta doesn’t preclude earning ordinary credit card rewards (cash back, airline miles, etc.) or the rewards of a particular brand’s loyalty program.

Yet what makes cash back shopping apps (and other reward-oriented shopping apps) a potential game-changer is that they are relevant across huge swaths of the retail and restaurant landscape, and loyal users check and utilize one or more of these apps pretty much every time they enter a chain store or chain restaurant.

And even though Ibotta rolled out its payment functionality with only thirty or so participating retailers and restaurants, it’s a number that figures to increase rapidly, as Ibotta’s legacy offerings include hundreds of major brands. That’s why it’s easy to see how Ibotta users might soon be using Pay with Ibotta almost everywhere they shop or go out to eat, as opposed to installing and utilizing the apps of numerous individual brands.

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Meanwhile, Ibotta and its competitors aren’t the only companies in the rewards space giving consumers new opportunities to pay with a credit card and earn rewards in the process.


In fact, many reward-oriented credit card holders have long been frustrated about being denied the opportunity to pay for big-ticket items (like paying the rent, or purchasing a car) using a credit card. Enter Plastiq® (https://www.plastiq.com/), which allows consumers to pay virtually any bill using a credit card.

In a nutshell, the way it works is that the user of the service tells Plastiq who to pay and how much, then Plastiq charges the user’s credit card. Finally, Plastiq pays the bill or expense on the user’s behalf via check, ACH or wire transfer.

The catch is that Plastiq charges a fee of 2.5 percent for each transaction, but if the rewards available to the user are greater than 2.5 percent of the spend (or offset in other ways, possibly by deducting Plastiq’s fee as a business expense, for example), this is a new way to earn rewards on big-ticket items for which paying by credit card has historically not been an option.

All in all, between cash-back shopping apps like Ibotta and services like Plastiq, there’s never been a better time for businesses to incentivize potential customers—and for those customers to earn valuable rewards from paying by credit card.


1 Apple’s Tim Cook dishes on taxes and the demise of money, CNET, https://www.cnet.com/news/apple-tim-cook-holds-shareholder-meeting-2018-apple-park-health-mobile-payments-taxes/

2 Ibotta introduces Pay with Ibotta, an in-app payments platform providing consumers with instant rewards at the point of purchase.

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