Loyalty Points vs Cashback on Shopify: Which Reward Fits?

Loyalty points versus cashback on Shopify comes down to simplicity against engagement. Cashback gives a customer a share of each order back as store credit, which Shopify supports natively, and it is easy to understand: “5% back on every order”. Points add a layer (earn points, convert them to a reward) that a loyalty app runs, which lets you reward actions other than orders and run tiers, at the cost of a program customers must learn. For a small store that wants repeat orders, cashback as store credit is usually enough to start.

Points vs cashback at a glance

What each really costs

Take an average order of $60 and a gross margin of 50%.

• 5% cashback returns $3 as store credit on every order. When a customer spends that credit, the cost to you is $3 of revenue on a future order, and only if they come back.
• 1 point per $1, with 100 points worth $5 works out to $3 per $60 order, the same rate on paper. If your points expire, the points nobody redeems lower your cost.

At a 50% margin, 5% of revenue is 10% of your gross profit. Shopify also charges its third-party transaction fee on the amount paid with store credit for stores created on or after May 12, 2025, so add that to the cost of a cashback program on a newer store. Shopify’s note on that fee names store credit and gift card payments; a points reward that an app turns into a discount code lowers the price instead of paying part of it. Either way, ask your accountant how to record unredeemed balances.

Cashback with Shopify store credit

Shopify’s store credit page, read on October 23, 2026, gives the mechanics:

• You issue store credit to a customer’s account; it shows as a payment method at checkout for customers signed in through customer accounts or using Shop Pay, once Apply store credit is on in the checkout’s payments settings.
• A single customer account can hold less than $15,000 USD of store credit, and only the balance in the checkout’s currency shows.
• Store credit cannot be applied to draft orders or edited orders from the admin; send the customer a checkout link instead.
• You can set expiration dates, but check your local laws first.
• Store credit is not available with legacy customer accounts, only the full balance can be applied to an order, and it can pay for the first order of a subscription but not the recurring bills.
• To issue it, open the customer in Customers, click Edit in the Store credit section, choose Credit, enter the amount and an expiry date or none, and select Notify customer to send the email. Customers see it once Store credit is turned on under Settings > Customer accounts.

A simple cashback program: once a month, export the month’s orders by customer, calculate 5% per customer, and issue the credit with a short email. To automate parts of it with Flow and segments, see store credit automations. When the program needs points, tiers or referrals, compare apps in Shopify loyalty program apps. The running a store hub has the guides on segments, Flow and retention around it.

Frequently asked questions

Is cashback better than points? Cashback is simpler to explain and to run, and Shopify supports it with store credit. Points suit stores that want to reward reviews, referrals or birthdays and to run tiers, which needs a loyalty app.

Can Shopify give cashback without an app? You can issue store credit to customers’ accounts and let them spend it at checkout, which works as cashback. Calculating and issuing it on a schedule is manual unless you automate it with Flow or use an app.

Does store credit expire? Store credit expires only if you set an expiration date, and Shopify asks you to check your local laws before you do. Without a date, the balance stays on the customer’s account.