Cashback Business Model. How are companies making a profit after giving cashback for making payments for bills recharges? https://qr.ae/pNyirk

Payments Service Providers (PSPs) – and any other Companies – that give you Cashbacks for making payments for bills and recharges probably make revenues via advertising off of your payments data.

For example, if you consistently make a payment of, say, TELCO A’s mobile phone bill, PSPs can let competitors of TELCO A display their ads and targeted offers to you in a bid to make you defect to them. For this privilege, they can charge advertising fees to said competitors.

You can more examples of the kind of ads and targeted offers enabled by payments data in Your Personal Data Is Not Sold, Just Used.

I have highlighted the term “probably” above. That’s because many PSPs may not run advertising off of your payments data. In that case, they probably make no Revenues at all.

Now, advertising fees is Revenues. It’s hard to say whether PSPs make Profits out of these Revenues. For all we know, they may be charging the cashback expense to their marketing budgets.