FX cashback is a system that, at first glance, seems mysterious—it essentially means “you get money back just for trading.” In this article, we’ll explain where the affiliate commissions that fund this program come from and how they’re calculated and returned to traders, using actual rate examples.
[Conclusion] The source of cashback funds is the affiliate commissions that FX brokers pay to their referral partners. There are three main methods for calculating these commissions: “a fixed amount per lot,” “pips-based,” and “a fixed percentage of trading fees.” Which method is used depends on the broker and the account type. In all cases, there are no additional costs incurred by the trader.
The source of funds for cashback is affiliate commissions
FX brokers pay ongoing affiliate commissions to partners who refer customers, based on the trading volume of those referred customers. Cashback services enter into contracts with these brokers as partners and return the majority of the commissions they receive to traders. In essence, it is a “self-affiliate” service that returns commissions earned from members’ own trades back to the members themselves.
Unlike typical performance-based advertising, where a commission is paid only once when an account is opened, this affiliate commission continues to be paid as long as the referred customer continues to trade. That’s why the cashback isn’t a one-time payment—you receive it every time a trade is made.
The Flow of Money: 3 Steps
Taking REBATE ONE as an example, money flows as follows:
① Open an account and start trading
Open a brokerage account (or link an existing account) through REBATE ONE, and trade as usual using that account. Each time you trade, you pay the broker the spread and trading fees.
② Payment of Advertising Fees (Affiliate Commissions)
Based on trading data, brokers pay REBATE ONE advertising fees (affiliate commissions) proportional to trading volume. These commissions are already included in the spreads and commissions.
③ Cash Back
Most of the advertising revenue we receive is returned to customers as cashback. You can withdraw the funds once you meet the requirements.
The key point is that the commission is “already included in the spread.” Whether or not a trader uses a cashback service, the spreads and fees they pay remain the same. If they don’t use the service, that commission simply goes to the broker or referral partner and is not returned to the trader.
Three Methods for Calculating Affiliate Commissions
The method for calculating the rebate amount is determined by the combination of the provider and account type. We’ll explain this along with examples of how it’s actually implemented at REBATE ONE.
| Method | How to Calculate | Examples of Use |
|---|---|---|
| Fixed amount per lot | A fixed amount (in yen or dollars) is refunded for every lot traded | A method commonly used in low-spread accounts. You can accurately calculate the rebate amount before placing a trade. |
| Pip-linked | A rebate equal to the monetary value of the price fluctuation unit (pips) for the traded security | A method commonly used in standard accounts. The rebate amount varies depending on the stock. |
| A certain percentage of the transaction fee | A rebate equal to a certain percentage of the account's transaction fees | A method commonly used in ECN-type (commission-based) accounts |
In addition, some brokers offer a system where they rebate a certain percentage of the spread. Even within the same broker, the system and rates may vary depending on the account type or security category, so please check the rebate rate page for each broker to confirm the exact rebate amount.
An officially recognized system that also benefits businesses
You might wonder, “Would brokers really allow such a system?” However, the affiliate program is an official partnership program provided by the brokers themselves. For brokers, the benefits include acquiring active clients without incurring advertising costs, and generating ongoing revenue as long as those clients continue to trade. It is precisely because this structure makes sense for all three parties—traders, brokers, and the service providers—that it has become established as the industry standard.
Note: Whether the service charges a “markup”
With some cashback services, a unique markup is applied to the spreads on dedicated accounts, so even if the cashback rate appears high, the actual cost may end up being higher. When comparing cashback offers, be sure to check not only the cashback amount but also whether the account’s trading conditions are the same as those of the broker’s standard accounts. REBATE ONE does not apply any markups, allowing you to trade under the same conditions as the broker’s standard account.
FAQ
Are providers that offer more cashback a better deal?
It's hard to generalize. Even if the cashback amount is large, the effective cost (spread minus cashback) may still be high if the spread is wide. We recommend comparing the effective costs for the specific securities you want to trade.
When will I receive my refund?
This information is aggregated based on transaction data and reflected on your My Page. Since the conditions for reflection and withdrawal vary by provider and service, please check the terms and conditions of the service you are using.
Won't accounts opened through cashback programs have less favorable terms?
For services without markups, the trading conditions are the same as those for accounts opened directly with the broker. REBATE ONE accounts have the same spreads and commissions as the broker’s standard accounts.