Overall, offering cash back to your customers can be a benefit.
1. It provides a service of convenience for your customers and can develop loyalty and an opportunity to spread word of mouth advertising regarding the convenience.
2. Customers appreciate the ability to add cash to their pocket without an additional trip to the ATM and without incurring the ATM fee.
3. Offering cash back does carry an extra processing fee to the debit card transaction for the merchant, but the extra value of service provided to customers can outweigh the minor increase in the overhead cost.
4. Offering cash back can draw customers into your store to make a purchase. For example, a customer would rather pop into a convenience store that offers cashback on a purchase of a candy bar. The customer gets no value from the fee at the ATM machine, but can get some snacks for the same amount as the ATM fee.
5. It provides a draw to come into the merchant’s store and can produce extra spur of the moment purchases.

Here are some rules to follow when offering cash back.
1. For the merchant’s protection, cash back should only be given from a pin debit card transaction. Pin debit transactions are the same as cash. They cannot be charged back like a credit card transaction or a debit transaction run through the Visa/MasterCard Credit Networks. Credit card transactions have to equal the amount of the item purchased.
2. Merchants are not allowed to transact cash-only transactions.
3. There are upper maximum upper limits to how large a cash back transaction is allowed on the debit card networks.

To process cash back on transactions, the merchant’s credit card POS terminal or device must be encrypted for pin debit transactions. There is an extra step for the customer to enter their pin in order to complete the transaction. These devices track the cash back amounts and the cash back amounts are identified in the authorization process.

A question we get asked is if the service adds any risk of chargeback? The answer is No. If a customer disputes a debit card transaction and wins it, the cash back portion is not included.

Give us a call at 505-296-2847 if you have any further questions on cash back of pin debit. We recommend pin debit transactions for merchants who can be prone to chargebacks. An example would be a liquor store.