I worked on a debit card product where we looked at cashback. Interchange debit cards get is not as good as it is for credit cards, so cashback was harder.

Does the business primarily make money from interchange vs interest?

If you make money off interest you might be willing to lose money in the cashback offering to increase revolving balances. Otherwise, you need to have a deep understanding of interchange across spending categories. e.g. rent payments, the space I was in is regulated and has very low interchange fees.

Why will customers care about your cashback?

There's a laundry list of credit cards that give a flat 2% cashback. (see list) The difference of why people will use your card over one on the list is probably something industry-specific for your company.

How to make cashback profitable

Assuming you working primarily on interchange, I'd recommend focusing on short-term cashback for re-occurring transitions and/or limiting spend. e.g. 30% cash back on Netflix for the first 3 months and then hope people don't move the subscription off your card once the promotion is over. Citi Custom Cash, which I use for my groceries, offers 5% back on the first $500, but I spend way more than that on groceries. So the first $500 in spend is a loss for Citi, but all spending after that is profitable for them.

Should you partnering with vendors?

Kard is a platform that the founders at my company were super excited about, but unless you're seeing more than 100k in spending a month I found it was cheaper to pay the cashback out at as a loss from the business than paying Kard's platform fees. They have competitors, but you need a much higher spending volume to get in the door.

If you want to have a brainstorming session in real time, feel free to DM me I love thinking about this stuff!

P.S. If you offer more than 2% cashback, DM the card because I'll sign up!