Cashrewards, a popular Australian loyalty program boasting a database of 2.5 million users, abruptly shut down last week, leaving shoppers with many unanswered questions. The cashback website, known for returning a percentage of purchase prices to its members after shopping at partnered retailers, has ceased operations without prior warning.
As the dust settles, consumers are left wondering about the future of their funds and the viability of cashback programs. Here’s what we know so far about the situation and the broader implications for the cashback industry.
The Sudden Closure of Cashrewards
Despite its popularity, Cashrewards has not provided a clear explanation for its sudden shutdown. Neither the company nor ANZ Bank’s venture capital fund 1835i, which owns the cashback app, have made any public statements regarding the closure. According to the Australian Financial Review, Cashrewards was struggling to meet ANZ’s performance expectations amid a broader review of the bank’s profitability under new chief executive Nuno Matos.
What Happens to Your Funds?
Cashrewards has advised its members to withdraw their funds by October 24 and to submit any transaction queries by October 10. CEO Anthony Seymour-Walsh assured the ABC that the company “intends to repay all customer monies.” If members miss the October deadline, available funds will be automatically transferred to their linked bank accounts. All withdrawal claims must be submitted by December 12.
Understanding Cashback Business Models
Cashback programs like Cashrewards operate by offering discounts to attract a large member base, which in turn generates sales for retail partners. Andrew Brennan, a senior lecturer at Curtin University’s Faculty of Business and Law, explained that these offers are essentially a form of discounting.
“Gaining a large member base, and therefore generating more sales for the retail partners, is good for profitability,” Dr. Brennan told the ABC.
While cashback apps can help with cost-of-living expenses, they also pose the risk of overspending. Dr. Brennan noted that the appeal of discounts can lead to impulse purchases, emphasizing the importance of self-control.
Available Alternatives
With Cashrewards’ closure, consumers are exploring other cashback options. Financial research agency Canstar identified five alternative cashback apps and sites, with ShopBack and TopCashback among the top contenders. Sally Tindall, Canstar’s data insights director, emphasized the importance of withdrawing funds by the October 24 deadline and advised consumers to carefully read the terms and conditions of alternative programs.
“While it’s a shame to see an Aussie-owned cashback pioneer disappear, there are other similar brands still kicking around,” Tindall said.
Privacy Concerns and Data Security
Setting up a cashback account requires personal information, such as name, email address, and phone number. As of September 8, Cashrewards had 2.5 million Australians signed up for its service. Seymour-Walsh assured that customer data would be securely encrypted and destroyed at the end of any statutory period, with requests for data deletion being honored.
Dr. Brennan highlighted the need for customers to be aware of the data they share with free apps, noting that their viewing and buying habits are tracked within the cashback app or website.
Lessons for Consumers
Cashback apps remain popular due to the discounts they offer. Dr. Brennan pointed out that competition generally benefits consumers through lower prices and better service offerings. However, with Cashrewards no longer in the picture, the landscape has shifted.
“Competition is usually a good thing for consumers, in the form of lower prices, decent rewards, and potentially a better service offering,” Dr. Brennan said. “There is one less competitor now, with Cashrewards no longer supported.”
As consumers navigate this changing landscape, the importance of staying informed and cautious when engaging with cashback programs cannot be overstated. The abrupt closure of Cashrewards serves as a reminder of the need for vigilance in the digital economy.
