Cash Rewards Go Online

If the speed and ease of shopping online is not enough incentive for some consumers, ebates.com has a better offer: Cash back.

The promotional tool made popular by Discover Card is now being implemented online. Ebates.com lures consumers to its site with the promise of up to 25 percent cash back on their online purchases.

The ebates.com gateway provides connections to 13 product categories featuring more than 60 popular online stores, including Amazon.com, CDnow, Reel.com and Dell Computer. Participating companies pay varying rebate rates, up to 25 percent, for purchases made by Web surfers accessing their online stores through the ebates.com portal.

Where theMoney Comes From

Ebates.com gets commissions from the stores for sending them shoppers, but the company says it passes those commissions on to its member shoppers in the form of rebates. Ebates.com earns its income primarily through the banner ads it sells on its own site. The company tailors its ads to each visitor, based on demographic information it collects from its members.

Yes, There’s a Catch

To qualify for rebates, online shoppers must enter the store through the ebates.com site — not through the participating store’s own URL.

By funneling shoppers through its site, ebates.com shows its participating retailers how many customers it is attracting for them. Ebates.com also get the opportunity to show the shopper some banner ads while they are heading to their shopping destinations.

The amounts online retailers pay vary, with eToys weighing heaviest at 25 percent, followed by Smarterkids.com, Sharper Image and PlanetRx, all with 20 percent rebates. On the low end, Dell Computer pays one percent and Cyberian Outpost three percent.

In addition, some merchants have restrictions on the types of transactions that yield rebates. Amazon.com, for example, does not pay commissions on items bought at its auction site, and Beyond.com does not pay rebates on computer hardware.

Where the Money Goes

Ebates.com members get paid “real money,” not credits toward future purchases or discounts on online products. Every three months, ebates.com sends its members checks in the mail for the rebates they earned in the prior three-month purchasing period. Ebates.com also pays members commissions for referring friends to the site. The referring member earns 10 percent of the friend’s rebate each month.

Ebates was founded in Menlo Park, California in 1998, by Paul Wasserman and Alessando Isolani, two former Deputy District Attorneys with backgrounds in the computer industry. The privately held company raised funding from venture capitalist Foundation Capital.