Cash back is King, Reworth raises $2.8M led by ALLVP

The API-first startup makes it easy for financial institutions to offer cash back to their clients

Cash back has been shown to incentivize customers to spend more than just discounts.
By Marcella McCarthy (EN)
October 19, 2021 | 11:00 PM

Miami — Reworth, a Mexico-based startup that offers API solutions so financial institutions can offer cash back to their clients, today announced the closing of a $2.8 million Seed round. The company is focused on the stronger performance of cash back as a reward rather than discounts.

“Psychologically, if you receive money back, you tend to spend more money. And we also show in the bank app what merchants offer cash back at a place near you at a certain time,” said Raphael Kappeler, co-founder and CEO of Reworth.

According to the company, Mexico processes about $125 billion of card payments each year, yet the majority - 80% of transactions - are still done in cash. For LatAm as a whole, that number reaches $790 billion. But paying with a credit card and earning rewards or cash back can be beneficial to the bank, the merchant and the buyer.

A 2018 study in the U.S. showed that by offering rewards, merchants actually increased their revenue compared to when they offer discounts. While financially, the two offers may represent equal savings for the customer, the immediate gratification of a reward served as a stronger psychological pull. The 200 companies surveyed saw, “an average year-over-year revenue growth increase of 36 percent that can be attributed to reward-based promotions as opposed to 28 percent attributed to discounts,” the study said.


That being said, cash back offers an even stronger pull than points or rewards, especially for millennials. According to a Citibank survey of about 1,000 U.S. millennials, “69% of those surveyed said that getting cash back is ‘absolutely essential or very important to them when applying for a new credit card.’”

Often with other cash back startups, a person needs to download an app, and as with anything in life, the more steps there are, the less likely a person will follow through.

“The younger the generation, the less friction they want,” said Kappeler.

Raphael Kappeler (center) and his co-foundersdfd

One of the benefits of Reworth is that there’s no need to download an app - in fact, they don’t even have one. The API is integrated into the bank app, so money returns to users’ bank accounts instantaneously. By offering cash back through the use of a credit card, Reworth also incentivizes bank customers to pay with a card over cash, therefore making more money for the banks.

“We started the business because we realized that a lot of fintechs and banks have a problem engaging with their customers,” Kappeler said.

The company, which was founded in 2020, launched with a pilot in May of this year and has four financial institutions on board including Actinver. Reworth has about 1.2 million users so far.

This round was led by ALLVP, with participation from New York-based FJ Labs, San Francisco-based Soma Capital and New York based Gilgamesh which focuses its investments on fintechs in the Americas. This round brings Reworth’s total raised to date to about $3.2 million.

The company, which already has 20 full-time employees, plans to use the money to expand its tech team so they can offer same-day API integration as well as on board more financial institutions. The company also said they plan to expand to Brazil next, though that’s not an immediate plan.