India’s retail landscape is changing fast. With UPI transactions crossing 14 billion per month in 2025, digital wallets and loyalty startups are rushing to capture both shoppers and shopkeepers. But a question keeps surfacing: Do cashback and loyalty apps truly reward loyalty or do they just create another layer of gimmicks?
The Case For Cashback Apps
Supporters argue that cashback wallets and loyalty platforms are transforming the way Indians shop. Instead of juggling paper coupons or plastic cards, customers now get instant rewards directly on UPI payments.
- Ease of use: Newer entrants like Flipkart’s super.money or Navi UPI integrate rewards seamlessly, no extra steps needed.
- Direct savings: With up to 5% cashback on everyday spends, the appeal is clear in a price-sensitive market.
- Stronger engagement: For local retailers, loyalty apps reduce dependency on heavy advertising, replacing it with data-driven customer retention.
Analysts note that India’s loyalty program market is poised for explosive growth, estimated at $3.58 billion in 2025 and on track to reach $6.4 billion by 2029 (≈ 15.6% CAGR), with longer-term forecasts pushing the value up to $17.1 billion by 2035, underlining how seriously businesses and consumers in India are embracing loyalty solutions.
The Case Against Cashback Apps
Many users report that cashback rewards often come as discount vouchers, locked credits, or partner coupons that expire quickly. This leads to very low redemption rates, sometimes as low as 1%, making people doubt if they really benefit from cashback offers.
For retailers, giving out cashback can be tough. It reduces their already slim profit margins. LinkedIn reflections highlight broader concern: shoppers are drawn away by fast delivery, cashback, and pricing muscle from quick commerce apps, even when local stores have longstanding customer relationships.
There’s also a trust issue. With rising concerns about data misuse and fake cashback claims, the government has asked fintech startups to tighten compliance and build systems that prioritize fraud prevention and transparency.
Will This Debate End?
The rise of 15-minute delivery apps like Blinkit and Zepto has already reset consumer expectations for speed and convenience. Now, cashback apps are trying to redefine loyalty in the UPI age. But whether they create long-term brand stickiness or just short-term deal-hunting remains an open question.
Verdict: Loyalty or Illusion?
The truth lies somewhere in the middle. Cashback apps are undeniably changing the way Indians pay and shop, but their real test will be sustainability and trust. Consumers prefer rewards that are tangible, instantaneous, and simple to understand. Initiatives that boost customer loyalty while preserving profit margins are what retailers desire. Loyalty apps have the power to transform Indian retail if they can satisfy the demands of both consumers and merchants. If they don’t work, though, they can just end up being another fleeting trend in the cutthroat financial industry.
