A new rewards platform, backed by prominent retailers and technology figures in Britain, is set to launch on Tuesday with the aim of helping consumers combat what it deems as an online “stealth tax”. The platform, known as ChaChing, will first be introduced in the UK this week and will then expand to the US next month. As reported by Sky News, ChaChing is currently in the process of raising tens of millions of dollars from high-profile investors to support its rollout.
The innovative venture offers cash back to consumers by allowing them to directly purchase thousands of products from the platform. This is in response to the rising advertising fees charged by tech giants such as Google and Amazon. ChaChing argues that the auction model utilized by these behemoths has led to a significant increase in advertising costs, with retailers now being forced to spend up to 50% of the value of each online sale on promotional fees to maintain search engine results.
According to research, online beauty retailers heavily rely on search advertising on major tech platforms, which accounts for more than 80% of their website traffic. Among the co-founders of ChaChing is Alastair Lukies, the founder of previously listed fintech company Monitise and former fintech ambassador during David Cameron’s premiership. Sources close to the company have confirmed that it has already signed up well-known retailers such as Debenhams, owned by Boohoo Group, Fenwick’s department stores, and TM Lewin, the formalwear chain, as key merchant partners. The company has also secured backing from notable business figures including John Thompson, former chairman of Microsoft, Sir Douglas Flint, chairman of Abrdn, and Garry Lyons, former chief technology officer of MasterCard. Additionally, David Kershaw and Bill Muirhead, co-founders of the London-based ad agency M&C Saatchi, are also involved.
ChaChing’s main objective is to address the growing proportion of revenues that retailers using the biggest technology companies to sell online must hand over in advertising fees. It aims to achieve this by allowing merchant partners to select their cost-per-order, with the majority of the amount being immediately passed on to the consumer. According to ChaChing, this model can save consumers between 15% and 50% on their online purchases, with the cashback being transferred directly to their bank accounts after completing the transaction. For instance, if a customer purchases a pair of trainers for £100, and the retailer has spent £20 on advertising through ChaChing, the customer would receive up to £18 back, while ChaChing would retain the difference.
The launch of ChaChing coincides with increasing regulatory concerns about the dominance of the world’s largest technology companies. In the US, Lina Khan, chair of the Federal Trade Commission, has raised concerns about the high fees charged by companies like Amazon for digital advertising, calling it anti-competitive. As stated by the watchdog last September, “The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.”
ChaChing, which is also involved in a separate campaign group called ‘Axe the Tax’, is planning a comprehensive and prolonged initiative to draw attention to this issue. Alastair Lukies, co-founder of ChaChing, expressed his belief that consumers will be surprised to discover the existence of what the industry calls the “big tech tax”. He stated, “Even the savviest shoppers will fall into this trap, which is increasing the cost of living at a time when many are struggling financially. Most retailers are well aware of the rising costs of online advertising, which are significantly eating into their profit margins. They would be thrilled to offer their customers a more rewarding online shopping experience.”
ChaChing is currently in the final stages of a funding round that will provide it with significant growth capital. The identities of potential new investors have not been disclosed. The company also plans to give consumers the option to donate a portion of their cashback to charity, with Great Ormond Street Hospital already on board as a partner. In addition, ChaChing is working to provide cash rewards to NHS staff through its intranet, and The Mum Club, a networking platform for mothers, will promote ChaChing to its members. The company is also in the process of securing more retail partners.
“We are thrilled to partner with ChaChing as we are constantly looking for efficient and effective ways to reach millions of new customers,” said Dan Finley, CEO of Debenhams. “We strive to be at the forefront of innovation in our industry, which is why we have chosen to be a launch partner with ChaChing.”
