Cashback is not a gift from a bank or a shopping site. It is a share of a fee that the merchant already pays, redirected to the customer to influence behaviour.
Merchants pay to accept payment
Every card transaction carries a fee paid by the merchant, divided between the card issuer, the network and the merchant's payment processor.
The issuer's portion funds fraud protection, credit risk and customer service, and part of it funds rewards.
A card offering higher cashback typically carries a higher merchant fee, which is why acceptance of premium cards is sometimes restricted or surcharged where local rules permit.
Category rates follow merchant economics
Cashback rates vary sharply by category because merchant fee structures and competitive conditions vary with them.
Categories with thin margins, including fuel and groceries, often negotiate lower fees and therefore support less generous rewards.
Categories with wider margins or stronger competition for the customer relationship can support more, which is why dining and travel rates are frequently higher.
Shopping portals are paid commission
Cashback websites and browser extensions earn affiliate commission when a purchase is attributed to them, and they return a portion to the shopper.
The commission is a marketing cost the merchant was already prepared to pay, so nothing is being given away that was not already budgeted.
This is why cashback rates through portals differ so much between retailers, since each sets its own commission according to how much it values the referral.
Attribution decides whether a claim is paid
Payment depends on the merchant recognising the referral, usually through a tracking parameter attached when the shopper follows the link.
Anything that interrupts that chain, including a coupon site visited afterwards or a blocked tracker, can cause the claim to fail.
Delays before payment exist so the merchant can confirm the order was not returned, which is why cashback typically clears months rather than days after purchase.
What the funding model implies
Because cashback comes from fees embedded in prices, non-participating customers contribute to rewards they do not receive.
The rational response is to use the mechanism where it is available rather than to treat it as a reason to spend, since the reward is always smaller than the amount spent.
Rewards that require carrying a balance are the clearest case where the arithmetic reverses entirely, as interest charges exceed any cashback rate on offer. A reward earned on borrowed money is not a reward at all.