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Shoppers Prefer Cash Back Over Points for Loyalty Programs

Rewards programs make shoppers more loyal to a brand and more likely to recommend it, according to a new study.

Cash back is the top way shoppers want their loyalty program benefits, according to a new study from PayPal and research firm Reach3 Insights.

68% of study participants said they prefer cash back rewards because of the simplicity, compared with 32% who prefer points, according to the study of 1,068 U.S. adults fielded in July 2025. 

The study found that consumers prefer cash back because its transparent and easy to understand. It also provides a feeling of instant gratification and saving money.  

For years retailers have tapped into these desires with loyalty programs. About 77% of marketers say they have a customer loyalty program, according to Forrester’s 2025 Marketing Survey.   

Recently, a number of retailers have revamped their loyalty programs in an effort to drive even more repeat purchases. Retailers including Ulta, Sephora and David’s Bridal now have a tiered model in which consumers receive more benefits if they are in a higher tier because they’ve spent more money annually with the brand. These programs often use a point system where shoppers earn points for every dollar they spend, which they then redeem for rewards.  

Retailers such as Target, CVS and Kohl’s offer cash back loyalty programs.   

Other retailers have taken the Amazon approach and opt for a paid membership program. Home furnishings brand Wayfair, for example, launched Wayfair Rewards in 2024 which allows shoppers to pay a fee in order to receive 5% cash back and receive other perks like free shipping. The benefit for retailers with this model is the added revenue stream from the membership fee. Even consumer packaged goods brands are deploying paid tiers, including Tom Holland’s nonalcoholic beer brand Bero, for example, which debuted a paid membership program. 

Regardless of model, loyalty programs make a difference in shopper behavior. According to the study, 81% of consumers say rewards impact their shopping and payment behavior, and 59% say rewards make them more loyal to a brand.  

The study also finds:  

  • 63% say rewards make them feel more valued as a customer.
  • 49% are more likely to recommend a brand because of its rewards program.
  • 33% said that thinking about rewards gives them feelings of satisfaction and joy.