The Influence of Cashback and Reward Programs on Consumer Payment Preferences

Author

Kusuma Madineni, Dr. Chandu Venkateswarlu

Abstract

 Cashback and reward schemes have become routine in India's payment ecosystem, yet it remains to be seen how much influence they have on the choice of cash, cards and application-based UPI technology. Using primary data collected from 50 digital payment users in India (collected 15-30 September 2026 in a structured online questionnaire), this paper investigates the effect of reward schemes on the payment preferences of Indian consumers. An index of reward influence was constructed from eight five-point scales (α = 0.93) and the relationship between the index of influence, three other measured variables and the switch, loyalty, gender and primary payment method were tested with non-parametric procedures. 

The young, highly student-centred sample (88 per cent 18-25 years old; 92 per cent students) used a UPI application as their primary payment method (76 per cent). 

Respondents reported a moderate mean reward influence (3.18/5, 95 per cent confidence interval 2.86-3.49) that was not significantly different from the middle point of the scale (p = 0.265). Only ease of redemption was significantly above middle point (3.54/5). Reward sensitivity was positively related to the respondents' rating of the stated intention to switch if the reward was withdrawn (Spearman's rho = 0.45, p = 0.001), but not to self-rated loyalty, gender or primary payment method, with 34 per cent respondent trait similarity. It concludes that incentives are conditional and sensitive rather than universal and recommends pairing simple, reliable rewards with trust and service quality. 

Because the sample is small, non-random and student-centred, the results are to be seen as indicative rather than statistically generalisable.

Keywords

Cashback; Reward programmes; Payment preferences; Digital payments; UPI; Consumer behaviour; Switching intention

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References

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