> For the complete documentation index, see [llms.txt](https://help.dollarlabs.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.dollarlabs.io/dollarback-store-credit/getting-started/how-dollarback-works.md).

# How DollarBack works

DollarBack rewards your customers with store credit for shopping, signing up, referring friends, and more. Customers spend that credit directly at checkout. This page explains the credit lifecycle and the terms you'll see everywhere else in these docs.

## The credit lifecycle: earn → hold → spend → expire

Every dollar of store credit moves through the same four stages.

### 1. Earn

Customers earn credit through **cashback configs**, the rules you create under **DollarBack admin → Cashback**. A config can reward purchases (say, 5% back on everything), account signups, newsletter subscriptions, birthdays, social follows, or custom events you trigger through the API. Referrals are a separate engine with its own rewards, and loyalty tiers can multiply what a customer earns.

The amount is calculated per order from the order's real paid value: discounts reduce the cashback base, and portions paid with existing store credit or gift cards are handled according to your global settings.

### 2. Hold

Credit is issued when the order hits the trigger you choose: created, paid, or fulfilled. If you set a **holding period**, the credit sits in a *pending* state for that many days (0–365) before it becomes spendable. Holding is your refund buffer: if the order is refunded before the hold ends, the pending credit is clawed back before it ever reaches the customer's balance.

### 3. Spend

Once released, credit lands on the customer's Shopify-native store credit balance. Customers spend it two ways:

* **Directly at checkout**: store credit appears as a payment option, and the customer applies as much of their balance as they like.
* **In the reward marketplace**: customers exchange credit for rewards you define, whether that's an order discount, a product discount, or free shipping. Redeeming a reward mints a unique discount code and debits the credit cost immediately.

### 4. Expire

If you set an expiry window, unspent credit expires after that many days. Reminder emails go out at the thresholds you configure (for example 14 days and 3 days before expiry), so customers get a nudge to come back and spend. Expired credit is removed from the balance automatically.

## Store credit vs discount codes

DollarBack can pay rewards in two different currencies, and it matters which one you pick:

|                  | Store credit                                                    | Discount code                                      |
| ---------------- | --------------------------------------------------------------- | -------------------------------------------------- |
| What it is       | Shopify-native store credit on the customer's account           | A unique, single-use Shopify discount code         |
| Where it's spent | At checkout, as a payment option, combinable with any promotion | In the discount code field at checkout             |
| Partial use      | Yes, unused balance stays on the account                        | No, value beyond the cart total is lost            |
| Expiry           | Follows your credit expiry settings                             | Set on the config that issued the code             |
| Stacking         | Not a discount, so no combination rules apply                   | Follows your store-wide discount combination rules |

Any cashback config can pay out a discount code instead of credit, and every marketplace reward is delivered as a code. All reward codes hang off one shared Shopify discount whose parent code is `RDM-(DO NOT DELETE)`. Never delete it in your Shopify admin, or every outstanding code stops working.

## Glossary

| Term                   | Meaning                                                                                                                                                                                   |
| ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Store credit**       | Shopify-native credit on a customer's account, spendable at checkout as a payment option. DollarBack issues, debits, and expires it.                                                      |
| **Cashback config**    | A rule under **DollarBack admin → Cashback** that defines how customers earn: the type (purchase, signup, newsletter, birthday, social, custom), the value, targeting, dates, and limits. |
| **Reward marketplace** | The catalog of rewards customers can buy with credit: order discounts, product discounts, and free shipping. Managed under **DollarBack admin → Redemption**.                             |
| **Referrer / referee** | In a referral, the *referrer* is the existing customer who shares their code and earns a reward; the *referee* is the new customer who uses the code and gets a discount on their order.  |
| **Tier**               | A loyalty level (Advanced plan) with entry conditions and a cashback multiplier. Higher tiers earn more from the same configs.                                                            |
| **Holding period**     | The number of days issued credit stays *pending* before it becomes spendable. Acts as a refund buffer.                                                                                    |
| **Expiry**             | The window after which unspent credit is removed. Reminder emails fire at your configured thresholds beforehand.                                                                          |

## Related articles

* [Quick start: launch your first cashback program](/dollarback-store-credit/getting-started/quick-start-launch-your-first-cashback-program.md)
* [How cashback is calculated](/dollarback-store-credit/earning-cashback-programs/how-cashback-is-calculated.md)
* [How customers spend their credit](/dollarback-store-credit/spending-store-credit-and-rewards/how-customers-spend-their-credit.md)
* [Credit expiry and reminders](/dollarback-store-credit/spending-store-credit-and-rewards/credit-expiry-and-reminders.md)