In today’s competitive e-commerce landscape, incentives like discounts and cashbacks are key to increasing conversions and enhancing loyalty. But which delivers better cost-effectiveness, profit margin protection, and long-term value?
According to the 2025 Wallid Strategic Report, the answer isn’t either/or — it’s knowing when to use each strategically.
Conversion Power: Real Stats on What Works
Key Stats from the Report:
Average global e-commerce conversion rate: 2.5%–3.75%
Discounts can boost conversions by up to 10% during sales events (e.g., Black Friday)
Cashbacks drive:
Discounts can boost conversions by up to 10% during sales events (e.g., Black Friday)
Cashbacks drive:
- 3.4× higher conversion rates on average
- 46% higher AOV (Average Order Value)
Insight
Discounts create urgency and remove price friction — great for first-time purchases.
Cashbacks appeal to value-seeking shoppers and perform better with high-value carts, leading to more profitable conversions.
Cashbacks appeal to value-seeking shoppers and perform better with high-value carts, leading to more profitable conversions.
Profit Margins & Psychological Value
While discounts reduce the checkout amount immediately, cashbacks:
- Are treated as marketing costs
- Are often unclaimed (leaving money with the merchant)
- Offer higher perceived value without hurting margin as much
Example
On Cyber Monday 2024, U.S. shoppers spent $13.3B.
High-ticket items did well with 30–39% discounts.
However, cashback campaigns led to more repeat purchases and lower returns.
High-ticket items did well with 30–39% discounts.
However, cashback campaigns led to more repeat purchases and lower returns.
Loyalty, Repeat Orders, and Customer Trust
Loyalty isn’t just a metric. It’s a growth engine. With cashback:
Unlike discounts, cashback creates a sense of investment in your store — especially effective with Shopify payout timelines and direct bank transfers.
- 22% increase in return customers
- 18% higher spend on repeat visits
- 46% say cashback influences brand choice
Unlike discounts, cashback creates a sense of investment in your store — especially effective with Shopify payout timelines and direct bank transfers.
Loyalty and Retention: Long-Term Value
Cashback loyalty data:
- +22% return customers with cashback programs
- +18% average spend on repeat visits
- 46% of cashback users say it influences their brand choice
Insight
Discounts fuel a “deal-seeker” mindset (users chase the next lowest price)
Cashbacks create brand investment (“I have credit to use”), boosting Customer Lifetime Value (LTV)
Cashbacks create brand investment (“I have credit to use”), boosting Customer Lifetime Value (LTV)
Profit Margin Math
Cashbacks allow you to retain more profit per conversion, especially with non-card payment methods like Wallid’s pay-by-bank.
Strategic Use Cases: Which to Use When?
Implementation Tip: Use Smart Checkout Tools
Platforms like Wallid.co allow Shopify merchants to:
- Offer instant cashback at checkout
- Avoid card processing fees
- Enable personalized incentives based on user behavior
Final Word: Use Both — But Smartly
Instead of picking sides:
- Use discounts to trigger immediate conversions.
- Use cashbacks to drive repeat business, protect margins, and grow LTV.
- Think of cashback not as a cost, but a brand investment.
Frequently Asked Questions
Q1: Are cashbacks more profitable than discounts for e-commerce stores?
A: Yes. Cashbacks are treated as marketing costs, are often unclaimed, and preserve more margin compared to discounts which reduce revenue immediately.
Q2: When should I use discounts instead of cashbacks?
A: Use discounts for time-sensitive campaigns or when trying to reduce cart abandonment quickly. They work best for new customer acquisition and urgent conversions.
Q3: How do cashbacks improve customer loyalty?
A: Cashbacks make customers feel invested in your store. 46% of shoppers say it influences their brand choice, and cashback users are 22% more likely to return.
Q4: What is the average increase in order value with cashback?
A: On average, cashback promotions lead to a 46% increase in AOV (Average Order Value), especially with high-ticket items.
Q5: What tools can I use to offer cashback without card fees?
A: Platforms like Wallid.co allow you to offer instant, AI-personalized cashback incentives using pay by bank checkout, reducing processing costs and increasing conversions.
A: Yes. Cashbacks are treated as marketing costs, are often unclaimed, and preserve more margin compared to discounts which reduce revenue immediately.
Q2: When should I use discounts instead of cashbacks?
A: Use discounts for time-sensitive campaigns or when trying to reduce cart abandonment quickly. They work best for new customer acquisition and urgent conversions.
Q3: How do cashbacks improve customer loyalty?
A: Cashbacks make customers feel invested in your store. 46% of shoppers say it influences their brand choice, and cashback users are 22% more likely to return.
Q4: What is the average increase in order value with cashback?
A: On average, cashback promotions lead to a 46% increase in AOV (Average Order Value), especially with high-ticket items.
Q5: What tools can I use to offer cashback without card fees?
A: Platforms like Wallid.co allow you to offer instant, AI-personalized cashback incentives using pay by bank checkout, reducing processing costs and increasing conversions.
