Why are UPI apps giving cashback?

UPI apps offer cashback as a strategic incentive to encourage digital payments and build customer loyalty. These rewards serve as a customer acquisition tool, helping platforms increase their market share and keep users engaged. By providing tangible value through small returns on transactions like bill payments or merchant spends, apps foster a habit of using digital interfaces instead of physical cash. Additionally, cashback acts as a promotional mechanism for partner brands, often funded by the marketing budgets that companies would otherwise allocate to traditional advertisements.