What is Payback and How Does it Work?

Payback is Germany's largest and most widely used cashback program. If you've been living in Germany for some time, you've probably seen the Payback logo at checkout counters, or been asked for your "Payback Karte" by a cashier.

Payback allows you to earn points on purchases at various partner stores and websites. They've partnered with some of Germany's biggest names in retail, including Rewe (groceries), DM (drugstores), Amazon (online shopping), Aral (gas stations), Penny (discount supermarkets), and Alnatura (organic food). With 700 partner brands, you can collect Payback points just by doing your regular shopping. These points can then be redeemed for a variety of rewards, discounts, or even cash.

How to Earn and Maximize Payback Points

The standard earning rate is 1 point per €2 spent at any of the partner stores. 1 Payback point is equivalent to 1 cent – meaning you get 0.5% cashback on your purchases. Now, I know what you're thinking: it doesn't sound like much. Why bother then?

Enter coupons – this is where the Payback magic happens. Payback coupons can multiply your points by 3 to 40 times the regular rate. That means instead of 0.5%, you could be looking at up to 20% cashback, making Payback truly worthwhile. Some coupons have conditions (e.g., some Rewe coupons might only apply to delivery or pick-up service) or are valid on specific categories (e.g., household items on Amazon). You can find and activate these coupons in the Payback app or on their website before shopping. It's also worth subscribing to the Payback newsletter to get notified of new coupons and offers.

To use Payback when you're shopping in store, download the Payback app that stores your digital Payback card as a barcode and scan it at checkout. You can also opt for a plastic card if you prefer.

For online shopping, download the Payback browser extension (called PIA, or PAYBACK Internet Assistent) and click on it to activate Payback before you check out. PIA will notify you if cashback is available on the website you're browsing and prompt you to activate it.

Payback also rewards you for using certain product features, such as activating coupons via their browser extension, or paying with Payback Pay (their own payment system, available in the app) at partner stores. If you have some free time on your hands, you can also earn extra points by participating in surveys and playing mobile games. Surveys only pay up to 150°P (€1.50), but I found that doing them once in a while is a fun way to learn some new German vocabulary.

For those looking to supercharge their Payback earnings, consider the American Express Payback credit card. It's one of the best free credit cards in Germany and can significantly boost your point accumulation. You earn 1 point per €3 spent (anywhere, not just at Payback partner stores!). Plus, it offers perks like extended returns and helps keep your Payback points from expiring. And did I already mention it’s absolutely free? If you’d like to learn more about Amex Payback credit card, check out our detailed guide below.

How to Spend Payback Points

Ok, so you followed all the promotions, diligently clicked on coupons, and amassed a fortune in Payback points – now what? You've got several options when it comes to redeeming your Payback points. Remember that the basic rate is 1 Payback point = 1 cent, so ideally you should always be looking for a better deal than that. Keep an eye out for offers and save your points until you find a good one – your points are valid for 3 years, so you’ve got plenty of time. Here are some ways to spend your Payback points:

• Instant Gratification: Spend Payback points at checkout in partner stores. 1 Payback point = 1 cent off your purchase. It's an easy and convenient option, but it’s not the best value unless there's a promotion running. For instance, when Rewe or dm offer a 10-20% bonus on point redemption, your points suddenly stretch much further — these promos are worth a wait.

• Payback Store: Spend your points in the Payback store to buy things. Items like household items, gadgets or WMF kitchenware are often good deals – not all of them though, so be sure to compare the item point value with the actual retail price. Again, it's better to wait for promos like 1000°P off or a free item (like a WMF pizza knife) when you buy from the Payback store.

• Gift Cards: Convert your points to gift cards for Zalando, Douglas, Apple, H&M, Ikea, and more. Wait for discounts on these vouchers to get more value for your points – you want at least 5-10% off for this option to make sense.

• Airline Miles: Convert Payback points to Lufthansa miles (1 point = 1 mile) if you're a frequent flyer. If you do that, consider using Miles & More credit cards to collect more miles.

• Charitable Giving: Payback allows you to donate your points to various charities – there are quite a few to choose from.

• Cash: The secret option! Most people don't know about it, because it's somewhat hidden (by design, one might guess) on the Payback website, but you can convert Payback points directly to money in your bank account – just enter your IBAN and wait for your transfer to arrive. Great if you prefer flexibility, but it's not an option I personally use because the points are always converted at a basic rate of 1 cent, with no special offers possible here.

So there you have it – your crash course in mastering the Payback points in Germany. Remember, cashback programs are essentially free money for you as a consumer, so it makes sense to take advantage of this program, especially considering how easy it is to use. The key to Payback success lies in consistent use and savvy coupon activation – those small numbers can easily add up to a few hundred euros each year. Plus, it's kind of fun – collecting points is like a game, adding a dash of excitement to your everyday shopping.

Ready to start your Payback journey? Here's a little motivational boost: sign up now using the link below, and you'll receive 200 bonus points!

Payback is just one of many ways to get more value for your money in Germany — in Smart Living, we also dive into best debit and credit card options, talk about making the most of your health insurance, discuss how to save money on groceries and much more. Subscribe to our newsletter, and forward this to a friend who might be interested in these topics too. For daily bites of financial wisdom, follow Smart Living on Instagram, where we share quick, practical money-saving tips and fresh deals.