Cashback is not new, but its concept is often misunderstood by shoppers here. In countries like the US and Britain, cashback schemes are popular both online and offline, and there are thousands of merchants there offering customers a percentage of their purchase back in cash for each sale they make.
In Singapore, though, many associate it with credit card reward schemes instead of retail bonuses.
Local start-up ShopBack wants to change that perception of cashback, and get more customers to grow this segment of the market.
"We saw a gap in the market and we saw no reason why people could use this service in e-commerce in the US and UK for e-commerce, but not here," said Mr Joel Leong, 28, one of ShopBack's founders.
"With the growth in e-commerce here, it's definitely something that's of value to both companies and consumers," he added.
Customers get a percentage of their purchase money back each time they make a transaction through ShopBack's website.
It has over 500 merchants, including popular online stores like Groupon, Lazada and Zalora, as well as international websites like fashion store Asos and travel site Agoda.
ShopBack is the first South-east Asian cashback company to have Taobao, China's largest e-commerce website, on board as one of its merchants.
Each merchant gives the website a commission for every item sold that was directed from the ShopBack website. The company takes a quarter of the cut and passes the rest to the consumer.
Depending on the type of product, buyers usually get back 5 per cent to 20 per cent of the item's price. With some merchants, customers get a flat amount back, such as $15 for Agoda.
The cashback goes into an e-wallet tied to a customer's ShopBack account. When his cashback funds hit more than $10, he can withdraw the money by transferring it to a bank account.
The website was started in September last year by a group of six friends who were colleagues in the e-commerce industry.
Within a year, the company grew from those six founders in a small room to over 50 staff in a bigger start-up space at Block 71 in Ayer Rajah Crescent.
It has also expanded to two countries - Malaysia and the Philippines - and has received $1.1 million in seed funding as of March.
Its closest competitor here is Ebates, a cashback site based in San Francisco, which set up shop in Singapore this May.
ShopBack's rapid growth shows the upside of cashback and that it is finding a footing with local online shoppers. But the company has also seen attempts to game its system.
Mr Leong recalls someone making a $180,000 transaction through ShopBack with Lazada, which would have netted him almost $18,000 in cashback had the purchase been legitimate.
Instead, the buyer cancelled the order before it was delivered, thinking that he would be able to cash out that amount without paying for the products.
"This is why we have processes in place," said Mr Leong. "The cashback amount in your e-wallet becomes redeemable only after the merchant has approved the transaction and the sale is final, which is normally within 60 days."
The firm has given out $1.2 million in cashback over the past year. Mr Leong says it now has "an order a minute", which translates to about 1,440 customers a day, and gets more than 10,000 orders monthly.
He estimates its customer base is about 45 per cent Singaporeans, 45 per cent Malaysians and 10 per cent from the Philippine.
The ShopBack team is going for more growth, and plans to raise more money to expand elsewhere in the region, such as Thailand and Indonesia, where e-commerce is growing as well.
This article was first published on September 30, 2015.
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