Written by Fmi.Online Monday November 14, 2022
A rebate is a fraction of a sale transaction that is returned to the customer after the operation is closed. It is a sales incentive that rewards a client with a certain portion of the transaction value.    


  Rebates are a marketing strategy employed to create an incentive to keep purchasing. Differently from discounts, rebates are given after the sale is concluded. These rebates were normally sent by physical email with an application that had to be filled and sent back in order to receive it. Companies would ask for certain personal information from the client to issue the rebate, which also serves as a market research tool. After the rebate application is received the company processes it and if it meets certain criteria the rebate is issued and sent to the customer. In modern days, instant rebates also exist. Those are delivered to clients immediately after they have completed the purchase, normally through gift cards or coupons. Rebates are highly advantageous for both clients and companies since both parties benefit from them. Most rebates are stated as a percentage of the transaction value or they can also be established as a fixed amount of money.    

In  a nutshell: 

  • A rebate is a credit paid to a buyer of a portion of the amount paid for a product or service.
  • In a short sale, a rebate is a fee that the borrower of stock pays to the investor who loaned the stock.
  • Rebates on securities are facilitated by margin accounts, which have balances that are calculated daily based on the stock's price movements
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