I don’t even know where to start with this: I don’t understand it at all.
It’s obviously not free money.
They charge you 40 to your bank, they hand you 40 in cash.
Same thing as a withdraw, or using the atm in principle
One definition of cash back: Say you’re buying groceries with your debit card. The cashier says “That will be $10, do you want cash back?” If you say no, you’ll swipe your debit card and $10 will be withdrawn from your bank account. If you say yes and ask for $20 cash back, then the cashier will hand you $20 in cash and $30 will be withdrawn from your bank account.
Say you got to the supermarket and get your groceries for the week. Your groceries may cost you $53.79. If you ask for $20 cashback the store will charge you $73.79 for both your groceries and the $20 cashback.
It essentially works as a mini ATM but requires you to make a purchase alongside the cashback.
Then you use your credit card the merchants pays some percentage of the amount to the credit card processor. They do this because they believe they will get more business if they accept credit cards. Some credit card pass some of these frees back to the card holder to incentive the use of the card.