How Does Rakuten Work? A Review of the Popular Cashback App

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How Does Rakuten Work? A Review of the Popular Cashback App

Is Rakuten all it's chalked up to be?

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How Does Rakuten Work? A Review of the Popular Cashback App

For those of us who are domestic engineers, or just plain frugal, there’s nothing better than saving money on something that you needed to purchase anyway. Sales and coupons can be great ways to save money, but only if you’re limiting yourself to the same things that you would buy otherwise. If the discount is enticing you to make a purchase that’s unnecessary, you’re really not saving money.

Aside from sales and coupons, another way to save when you’re shopping is by earning cash back. You could be earning cashback with a credit card, through an app or a website, or multiple different methods. The amount of cashback that you’ll earn will often seem small, but since you can earn cashback from the purchases you’re already making, it’s free money.

While there are a lot of different cashback apps and websites out there, Rakuten is easily one of the most popular. You may know it by its former name, Ebates or from their many commercials, like this one from the 2020 Super Bowl:

The Basics

Rakuten allows you to earn up to 40% cash back on purchases at more than 2,500 different stores and websites. If you’re not already using Rakuten, chances are, several of the places you already shop are a part of Rakuten’s program, meaning, you could be earning cashback for those purchases that you’re already making.

Stores and websites like eBay, Target, Staples, Groupon, Kohls, Nike, and many, many more offer cashback through Rakuten.

One of the reasons why Rakuten is popular is because it’s simple to use (and it’s free). When I first heard about Ebates a few years ago, I didn’t bother with it because I thought it would be inconvenient. Once I gave it a chance, I saw that it actually takes almost no effort at all.

In order to earn cash back for your purchases, you can log in at Rakuten.com and then click through to the partner website from there. The screenshot below shows a page with details of the cashback that you’ll earn by shopping at ContactsDirect (currently 10%). All you need to do is click on the “shop now” button and your purchases will be tracked and the cashback will be credited to your account.

The easier way to do it is to install the free Rakuten browser extension (they call it the Rakuten Cash Back Button). With the browser extension installed, you’ll get a notification on the screen whenever you’re browsing a website that offers cash back through Rakuten. All you need to do is click on the notification and your shopping session will be tracked and you’ll earn cash back for the purchases that you make.

The screenshot below shows the notification you’ll get. In this case, I was on Macys.com and I was notified that I could get 6% cashback. Once you click the “activate” button, Rakuten will be able to track your shopping during that visit so you can earn cashback.

Thanks to the browser extension, using Rakuten really becomes effortless. There have been many times when I’ve earned cash back from purchases because the browser extension notified me that Rakuten was partnered with the website that I was visiting. You don’t even have to remember to check Rakuten if the extension is installed.

The cashback that you earn will accumulate as a balance that is visible in your Rakuten dashboard. Unlike some other cash back apps, you’ll earn actual money, not points that must be redeemed for gift cards. Rakuten will pay you with a check once per quarter.

Okay, But How Does Rakuten Make Money?

One of the most common questions about Rakuten is “how do they make money?” You might be wondering how they can afford to pay people like you just for making a purchase, and that might make you question if Rakuten is legit.

Rakuten makes money by referring customers to their partner stores and websites. Essentially, Rakuten is an affiliate that earns referral commissions when purchases are made, and they offer part of that money back to the consumer.

Many stores and websites are willing to pay a referral fee to Rakuten because it’s a win-win situation. The store or website doesn’t pay for advertising or marketing unless a purchase is made, so they know they’re not going to waste a lot of money on something that doesn’t get results.

Ways to Save Money with Rakuten

Rakuten offers consumers a few different ways to save money.

Online Shopping

The primary way that you’ll benefit from Rakuten is by saving money through online purchases. With more than 2,500 partners that are participating in the cashback program, you can earn cashback on a lot of your purchases.

The amount of cashback that you’ll earn will range from 1% - 40%, but in most cases, it will be at the lower end of that scale, like 1% - 5%. This may not sound like a lot of money, but there are a few things to keep in mind:

  1. It’s extremely quick and easy.
  2. It can be stacked with other rewards. If you have a 2% cashback credit card and you earn an additional 5% cashback through Rakuten, that’s a total of 7%!
  3. It all adds up. Over the course of a year, you can save a significant amount of money by adding up a lot of small amounts.

Browser Extension

You don’t need to install the browser extension in order to use Rakuten, but it will add a lot of convenience. You’re also likely to save more money thanks to the browser extension because it notifies you of stores that you might not have known were a part of Rakuten’s program. You can get the cash back button here.

Mobile App

Rakuten also offers an app for iOS and Android that is worth downloading. You can shop online through the app to earn cash back, get exclusive offers that are only available in the app, and get in-store coupons that can save you even more money.

Coupon Codes

Possibly my favorite feature of the browser extension is the way it helps you to find coupon codes. When you’re in the process of checking out, the browser extension will look for coupon codes that might be able to save you money. It will automatically attempt any coupon code that it finds and will use the best one that saves you the most money. It takes just a minute of extra time, but it’s well worth it. You’ll spend less money and you’ll still earn cashback on the amount that you spend.

Cash Back Visa Credit Card

Optionally, you can apply for a Rakuten Cash Back Visa Card that allows you to earn an extra 3% cash back on qualifying purchases through Rakuten, and 1% cashback on all other purchases. It has no annual fee and there is no limit to the amount of cashback that you can earn.

In-Store Shopping

In addition to cash back from online purchases, you can also get similar rewards for some in-store purchases. However, the number of offers that are available for in-store purchases pales in comparison to the options for online shopping. You may find some good offers from stores that you already frequent, but for most users, the cashback from online shopping is far more significant.

Make Money from Referrals

Aside from saving money on purchases, you can also earn some extra money by referring friends and family to Rakuten. They have a generous referral program that pays you $25 per referral. In order to qualify for the bonus, the person that you refer will need to make a purchase through Rakuten, but they’ll also earn a $10 bonus as a new user. With the types of rewards that Rakuten offers, it’s not difficult to make a few referrals.

Is Rakuten Safe?

You may be wondering if Rakuten is safe. It’s important to point out that when you make a purchase through Rakuten, you are not providing Rakuten with your credit card information. You’re still making the purchase at an ecommerce website like Target.com or eBay.com, just like you normally would.

As a Rakuten user, you will have a login and password that you should protect, but since Rakuten doesn’t have access to your credit card details, the security risks are minimal.

You may also feel comforted knowing that Rakuten is PCI compliant, which means that they must adhere to specific security standards.

Pros and Cons

Now that we’ve covered a lot of the basics, let’s go over some of the pros and cons to help you decide if you should try Rakuten.

Pros

  • Earn cash back for many of the purchases you already make. You don’t need to make unnecessary purchases to earn cashback with Rakuten. They have so many partner stores and websites that it’s easy to save on many of the things you already buy.
  • Rakuten is easy to use. Convenience is key when it comes to cashback apps/websites. Thanks to the browser extension, Rakuten is extremely easy to use.
  • Rakuten will find coupon codes for you. With the browser extension installed, you’ll automatically save money on many purchases because Rakuten is great at finding coupon codes.
  • You’re paid in cash, not points or gift cards. You’ll get a check for the amount that you’ve earned.
  • Can be stacked with other rewards and cashback. If you’re like me, there’s something really enjoyable about stacking multiple rewards to save even more money. You can use Rakuten with cashback credit cards, travel rewards credit cards, loyalty programs, coupons, and some other types of cashback apps to pile up the savings.

Cons

  • Slow payout. Rakuten only pays once per quarter, so you could be waiting a while for your check.
  • Limited options for in-store cashback. While the offers for online shopping are great, the in-store offers leave a lot to be desired. Hopefully, this is an area where Rakuten improves in the future.
  • Not every purchase at participating stores/websites will earn cashback. Some purchases will be excluded from earning cashback. You can find details at Rakuten’s website by looking up the store or website to see any restrictions.

Getting Started with Rakuten

If you’ve decided that Rakuten is for you, the first step is to create your free Rakuten account. Just head to Rakuten.com, enter your email address and a password, and click “join now”. Alternatively, you can also use an existing Facebook, Google, or Apple account to log in.

Once you’ve created your free account, I highly recommend that you go ahead and get the Cash Back Button, Rakuten’s free browser extension. While you can use Rakuten and earn cashback without it, the button makes it so much easier and more convenient. Plus, if you want to benefit from Rakuten’s ability to find and automatically apply coupon codes for you, you need the button.

Next, you will need to make purchases that total at least $25 within your first 90 days of creating the account in order to earn the $10 signup bonus. Thankfully, that’s really easy since there are more than 2,500 stores and websites that participate in the program.

Don’t go out and buy something you don’t need just to qualify for the bonus. The great thing about Rakuten is that you don’t need to change your shopping habits to earn rewards, so you’re bound to need something from one of their partner stores within the next 90 days, which will allow you to qualify.

Other Similar Cashback Apps

  • TopCashback - A very similar option that is not as well-known as Rakuten. TopCashback actually offers a higher amount of cash back at some websites.
  • Ibotta - A cash back app that is much better for in-store shopping than Rakuten. You can save a lot of money at grocery stores and other retailers with Ibotta. They have a lot of online shopping offers as well.
  • Drop - You’ll link your credit card to a Drop account and earn cash back automatically when you make purchases at certain stores.Swagbucks - Swagbucks is well-known for allowing users to make money by taking short surveys, but they also have a cashback program for online shopping that is very similar to Rakuten.

Final Thoughts

I’ve been using Rakuten for a few years and it’s easily one of my favorite ways to save money when shopping online. It’s completely free, takes almost no time or effort, and allows you to earn cash back for many of the things you need to buy anyway.

Even though the cashback component is great, I think I’ve actually saved more money thanks to the coupon codes it has automatically found and applied for me. There have been a number of times when I was buying something online and totally forgot about Rakuten, but the browser extension kindly reminded me by finding a coupon code that saved a significant amount of money.

I definitely recommend Rakuten to anyone who shops online, which is just about everyone these days. If you use the other cashback apps listed above and/or a good cashback credit card, you can really stack the rewards pretty easily.

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