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Cash Back and Loyalty Rewards

Cash back, and merchandise or travel bonuses, are offered by credit card companies and banks, particularly those in the United States, Asia and the Middle East, as means of attracting new customers, and keeping old ones. They pay the cardholder a small percentage of their net expenditures (purchases less refunds). Cash back benefits often provide the cardholder with the opportunity to choose from taking the cash, or using the “points” for purchases, travel (as with miles awards for air travel) or gift cards. Typically, cardholders must reach a certain points level to redeem for cash or other benefits. Some credit cards offer varying levels of cash back depending on the purchase. For example, a cardholder might earn 2% back on groceries and 1% on all other purchases.

When credit cards are used to purchase goods at a store, the retailer may not be happy to see these rewards spent outside the store. Indeed, when accepting such payments by credit card, merchants typically pay a percentage of the transaction amount in commission to their bank or credit card companies. Many large retailers contracted with the credit card companies to share the commission with the card holder, by giving the card holder points or a monetary amount in a closed loop gift card issued by the retailer. This last benefit, a monetary amount, is usually known as cashback. In order to achieve this, cashiers often hand over a gift card or a paper coupon at the till after payment. The amount is charged daily, in bulk, to the credit card company. In some cases, the cashback is restricted to the credit card program co-branded by the retailer. In other cases, it applies to all credit cards whom the issuer has contracted with the retailer. Such contracts include a B2B closed loop gift card purchase. Pertaining to such a contract, the credit card company commits to buy the closed loop card loads at a discount from the retailer.

A Different Approach

Ogloba has developed a unique feature whereby the credit card is swiped again by the cashier. A message is sent to the Ogloba back-end which includes the credit card number. Ogloba identifies the credit card number and the holder, and loads the relevant co-branded closed loop gift card with the cashback amount, according to the terms agreed between the merchant and the credit card company.

The solution is operated with both electronic cards and mGift cards.