Cashback Providers Face New Regulations – Here’s How to Stay Compliant

For years, cashback, bonus, and loyalty programs have been a lucrative business model. These platforms acted as intermediaries between brands and customers, handling everything from transaction processing to payouts—without requiring financial licenses or escrow accounts. However, recent regulatory shifts from BaFin (Federal Financial Supervisory Authority in Germany) have changed the game entirely.

If you operate a cashback or loyalty program in Germany, you may now be at risk of non-compliance with BaFin’s Payment Services Supervision Act (ZAG), which strictly regulates financial transfer transactions. Ignoring these new regulations could lead to heavy fines or even forced business closures.

So, what does this mean for cashback providers, and how can they continue to operate legally?

The Compliance Crackdown: Why BaFin Is Changing the Rules

Until recently, many cashback providers collected funds from brands or sponsors into their own accounts and then distributed the cashback rewards directly to customers. This method, though widely used, now falls under BaFin’s definition of regulated financial transfer services.

According to §1 Abs. 2 Nr. 6 of the ZAG, handling third-party funds—whether receiving, holding, or distributing them—qualifies as a financial transfer transaction. This means:

• Non-licensed cashback providers can no longer collect and distribute funds without proper authorization.
• Businesses found non-compliant risk severe penalties, including business suspension.
• Brands and sponsors working with non-compliant cashback platforms face regulatory scrutiny.

For cashback providers, the situation is clear: you either need a BaFin license, or you need a licensed payment service provider (PSP) to handle fund transfers on your behalf.

AML Compliance – Another Key Requirement for Cashback Providers

Beyond payment licensing, BaFin has reinforced its Anti-Money Laundering (AML) obligations, placing additional compliance burdens on cashback platforms.

Since cashback programs involve large volumes of financial transactions between multiple parties, BaFin requires them to implement strict AML measures to prevent money laundering and fraudulent activities. Non-compliance could result in hefty fines and increased regulatory oversight.

Key AML obligations for cashback providers include:

• Customer Verification (KYC) – Ensuring proper identity checks for participants.
• Transaction Monitoring – Detecting suspicious patterns and high-risk activities.
• Reporting Obligations – Submitting suspicious activity reports (SARs) to financial regulators.

For many cashback providers, meeting these obligations without an internal compliance department is unrealistic. Partnering with a licensed PSP like Novalnet ensures that all AML and regulatory requirements are handled seamlessly, reducing risk and ensuring full compliance with German financial laws.

Avoid Regulatory Risks – Novalnet Offers a Fully Compliant Solution

Obtaining a BaFin license is a lengthy and complex process, often taking years to complete. The alternative? Partnering with a licensed PSP like Novalnet, which provides a legally compliant payment infrastructure for cashback providers.

Novalnet’s BaFin-regulated payment solution ensures compliance by handling all fund transfers securely and transparently. Our insolvency-proof escrow accounts prevent regulatory risks while giving cashback providers full control over fund distribution.

• BaFin-Compliant Fund Handling – Securely collect and distribute funds without legal risks.
• Escrow Accounts for Full Protection – Prevents mismanagement and ensures financial security.
• Virtual IBANs for Automated Reconciliation – Each transaction is tracked, minimizing errors.
• Full-Service Payment Processing – No need for internal financial infrastructure.
• Built-in AML Compliance – Automates KYC, transaction monitoring, and reporting.

With Novalnet, cashback providers can continue operating seamlessly while ensuring that every payment follows German financial regulations.

Learn more about Novalnet’s legally compliant payment infrastructure for cashback providers

More Than Just Compliance – A Scalable Payment Infrastructure

While the immediate concern is regulatory compliance, Novalnet’s platform offers additional benefits that enhance operational efficiency.

• Automated Payouts & Real-Time Reporting – Reduces administrative work and accelerates cashback distribution.
• Integration with Accounting & ERP Systems – Connects seamlessly with bookkeeping tools for streamlined financial management.
• Custom Invoicing & Documentation – Generates brand-specific invoices and statements for better transparency.
• Payment Links & QR Codes – Simplifies transactions for customers and partners.

With these features, cashback platforms can go beyond compliance and optimize their entire payment infrastructure.

Now Is the Time to Act – Ensure Your Cashback Business Is BaFin-Compliant

BaFin’s new restrictions on non-licensed financial transactions are a turning point for the cashback industry. Providers that fail to comply risk severe regulatory action. Those that act now can gain a competitive advantage by ensuring compliance and operational efficiency.

With Novalnet’s all-in-one payment solution, you can:

• Stay compliant with BaFin and ZAG regulations
• Secure your fund transfers with licensed escrow accounts
• Automate AML compliance and risk monitoring
• Ensure long-term business continuity without financial risks

Don’t wait until regulators take action—future-proof your cashback business today. Contact our experts to see how Novalnet can help you navigate the new regulations seamlessly.

Get in touch now to discuss your compliance strategy.