How does Fetch Rewards make money?

  • Fetch Rewards is an online shopping platform enabling users to earn rewards in exchange for scanning their receipts. Co-founder Wes Schroll got the idea for the company after imagining a world where companies would be required to demonstrate their loyalty to consumers.
  • The Fetch Rewards business model is certainly nothing new, but it has made the process of earning rewards more simple. What’s more, users can earn points from virtually any store or gas station.
  • Fetch Rewards makes the bulk of its money through affiliate commissions collected from partnering brands. The company also collects interchange fees after launching a branded Mastercard debit card in late 2020.

Origin story

Fetch Rewards is an online shopping platform enabling users to earn rewards in exchange for scanning their receipts. The platform was founded in 2013 by Tyler Kennedy, Daniel Litvak, and current CEO Wes Schroll.

The idea for Fetch Rewards came while Schroll was a student at the University of Wisconsin-Madison. In the summer after his freshman year, Schroll said goodbye to university dining halls and meal plans and began stocking his own fridge and pantry. In the process, he started receiving promotional deals from companies that wanted to reward him for his business.

Schroll wondered if he could flip this traditional business model, imagining a scenario where companies would be required to jump through hoops to prove their loyalty to consumers. This would be facilitated via an app in which consumers would scan their grocery receipts and receive points when they made a purchase from a partnering brand.

In the second half of the school year, 19-year old Schroll partnered with Tyler Kennedy, with the pair raising $185,000 in cash, office space, and legal services in just over six weeks. Soon after, Schroll dropped out of college to pursue Fetch Rewards full time. The app was eventually launched four years later in 2017.

Fetch Rewards saw rapid growth during the global coronavirus pandemic, with more than 7 million active users scanning 50 receipts per second. The company attained unicorn status after raising $210 million in Series D funding in March 2021, with plans to expand internationally and into other verticals such as quick-service restaurants.

Fetch rewards business model

As stated earlier, Fetch Rewards is a shopping app that compensates consumers for scanning their receipts. This is not a new concept, but the company has managed to make the process more simple to encourage user uptake.

Users can take a quick photo with their smartphones or use the app’s eReceipt button to earn points. The app also has exclusive deals where shoppers can earn more points and there are no limits on how much a shopper needs to spend to qualify.

Purchases can be made from virtually any drug, grocery, liquor, hardware, or pet store. Gas stations are also part of the scheme.

Once a certain number of points have been accrued, users can exchange them for gift cards from participating stores such as Target or Amazon. For every 1,000 points accrued, the user earns approximately $1. 

Fetch Rewards revenue generation

Fetch Rewards works on the affiliate business model, with revenue derived from affiliate commissions paid by partnering brands. To a lesser extent, the company also earns revenue from interchange fees. 

Let’s take a look at this approach in more detail below.

Affiliate commissions

Most revenue comes from affiliate commissions, otherwise known as referral fees.

Fetch Rewards is compensated by partnering brands whenever a shopper purchases one of their products on the platform. The commission, which is a percentage of the total purchase price, is based on the contractual arrangement between both parties.

The affiliate model is beneficial for many brands, with some enjoying platform exclusivity and others appreciating transparent consumer purchasing data. 

Interchange fees

Fetch Rewards launched a branded debit card in late 2020, which allows the company to college interchange fees. 

Whenever a user pays with this debit card, an interchange fee is paid by the participating merchant to Mastercard. The card issuer then shares a portion of this fee with Fetch Rewards in exchange for promoting its card to users.

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