Kickback vs. Cashback credit card: How does cashback work?

How does cashback work?

Cashback (also cash back or cash-back) is a rewards program. When you pay with a cashback credit card, you accumulate either monetary cashback, bonus points, airline miles, or another form of reward. Here, we’ll focus mainly on cashback that rewards you monetarily.

Every time you pay with your card, a certain percentage of the transaction is added to your cashback points. This amount is either deducted from your credit card bill or credited to you in cash.

Bear in mind that not every credit card features a cashback program.

So, does cashback mean free money?

Yes, in a way it does if the cashback is paid in money and not credited as bonus points or miles.

Of course, you could argue that nothing is ‘free’. With a cashback credit card, you have to spend money to accumulate cashback. But, for instance, with Pliant corporate credit cards you can cash in your cashback in euros. You would anyway pay your business expenses, but with a cashback card you get a percentage of your spending back in cash.

What is a kickback in business?

Kickback can be considered a form of bribery and it's often associated with corruption either in business or in the public sector. In business, a kickback is a payment or compensation, the purpose of which is to guarantee preferential treatment from a business partner.

Kickback vs. bribe

The distinction between a kickback and a bribe is not laser-cut and often these two overlap. Kickbacks are usually mutually negotiated in business, or at least they're meant to be advantageous for both parties. A bribe might only benefit the extorter, but kickbacks benefit both business partners and are used to maintain the business relationship.

… and how is cashback different from a kickback?

Kickbacks can be outright illegal or at least exist in a gray area. Cashback, on the other hand, is a perfectly legal and transparent rewards program that incentives the cardholder to use the credit card for purchases. You might be familiar with cashback cards as a private consumer, but cashback programs are also available on business credit cards.

What is a cashback corporate credit card?

It's a business credit card that generates a (monetary) reward for each completed transaction. A percentage of each transaction is added to the total cashback sum. This sum is then either deducted from the credit card bill or deposited into a linked business account.

In practice: if your card generates 1% of cashback and you make a €1,000 purchase, you’ll be rewarded with €10 in cashback.

With corporate credit cards, the cardholder usually pays first the full amount of the transaction and the cashback amount is reimbursed later. This is the main difference between cashback cards that grant discounts that are deducted directly from the purchase price.

How do you get cash back on your credit card?

How you can redeem your earned cashback depends on your credit card provider. It can be either a monetary deposit into your bank account or you can use the cashback points to make purchases, collect a gift card, or, for example, upgrade your flight.

In the case of Pliant’s corporate credit cards, you can either request a deposit into your linked bank account or use the points to compensate for your company’s business travel emissions.

When is cashback particularly useful for companies?

The higher your corporate credit card spend, the more cashback you generate.

For example, marketing agencies with a high ad spend can save significant sums and permanently reduce their costs.

Also, companies that have high expenses in cloud services and software benefit from using a cashback credit card.

Even if your company’s spending isn’t sky-high, cashback cards still have advantages. Smaller transactions, such as hotel bookings, rental cars, or online purchases, can add up to significant amounts over time.

How to compare corporate credit cards with cashback

There are many cashback credit cards in the market, and comparing them can be difficult. And to make things more difficult, sometimes high cashback is used as a bait offer. There might be restrictions on what purchases accrue cashback and how you can redeem and use the collected cashback.

It’s smart to compare cashback credit cards first and also consider the potential downsides.

While the word cashback would suggest you get money back, not all cashback cards actually grant a monetary refund. Here’s how you distinguish a real cashback program from other bonus programs:

‘Real’ cashback credit card. With these cards, you collect a percentage of the transaction’s total in cashback. You can cash in the money from your linked account.
Cashback credit card for selected retailers. These credit cards work the same way as the above-mentioned cashback cards, but with one caveat: the cashback system is limited to only certain retailers. Often other retailers are cheaper, even if they don’t generate cashback for you.
Credit card for collecting points. In this model, you receive bonus points for every euro spent on the card. You can then exchange the points for non-cash rewards.
Credit card with airline miles. These cards are best suited for frequent flyers. For every transaction, you accumulate a bonus in the form of air miles. After you’ve reached a certain threshold, you can exchange the miles for free flights, upgrade your flight, or use the miles for other non-cash rewards.

CO₂-neutral business travel with Pliant Earth. Pliant Earth calculates travel-related CO₂ emissions for you, and you can use your cashback to compensate for your business travel emissions.

Pros and cons of cashback corporate credit cards

Like all things in life, credit cards with cashback can have both advantages and disadvantages.

When choosing the right credit card for your business, pay attention to the following points.

Pros of cashback credit cards

Cashback is paid in euros instead of points or airline miles.
Every transaction accumulates automatically cashback.
Cashback can be used flexibly without being tied to specific retailers or non-cash rewards.

Cons of cashback credit cards

Corporate cards must fit your company’s existing processes.
Some cards have high annual fees and other costs.
Cashback might only be available at certain retailers.
Cashback is often tied to minimum purchases.
Cashback is often capped at a maximum sum.
Cashback might not be paid out in euros.
If the offered cashback percentage sounds incredibly high, it might be just a temporary bait offer.

Pay attention to these points when looking for a cashback credit card

Make sure to pay attention to the terms and conditions. These vary greatly depending on the credit card provider and the product.

Sometimes high card fees and time spent on tedious card management might corrode away the benefit of cashback. When choosing your corporate card, pay attention to total fees and commissions and check whether you need to adapt your existing financial processes to be able to use the card solution.

There might be restrictions on cash withdrawals and what kind of transactions generate cashback. All too often you have to ask for the exact terms.

Cashback is only one extra benefit, albeit an important one. The card provider may offer other features and programs that can be relevant to your company.

Ideally, you should have both physical and virtual credit cards with cashback. This way you can give several employees credit cards and ensure that your business expenses are streamlined (and all collecting valuable cashback).

Pliant's cashback credit cards for businesses

With the credit cards issued by Pliant, you generate cashback for every euro you spend – regardless of whether you pay with a virtual or physical credit card.

Here’s a quick overview of some of the benefits you’ll enjoy with Pliant corporate credit cards:

Generous cashback for high card spending.
Exclusive partner deals across various categories, including hotel bookings, office equipment, and electronics.
Visa credit cards with high credit limits and worldwide acceptance.

Learn more about our pricing here.

Cash in, or use your cashback for CO₂ compensation

Thanks to their high limits, Pliant corporate credit cards are suitable for larger transactions.

The credit card bill is debited through your existing business account. Pliant is designed to integrate seamlessly with your existing financial and accounting processes.

How you want to spend your accumulated cashback is up to you. You can either cash it in or use it to compensate for your business travel’s CO₂ emissions.

In conclusion

In general, monetary cashback is more attractive for companies than credit cards with bonus programs. And no, cashback is not a kickback, even if it is paid out in money.

You don’t have to be a big spender to benefit from cashback on your business credit card. Whether it’s tens of thousands of euros in ad spend or a collection of smaller purchases, you generate cashback on all business expenses paid with your Pliant credit card.