Invariably when paying by debit card at my local supermarket I’m asked if I would like any cashback.
I don’t understand why stores offer this, If I say I’ll have £50 they give me my money but what profit is there in it for them?.
It’s not as if I’m going to spend it in store having already done my shopping
They’ll have less cash on hand to deal with for deposits. Otherwise, it’s just a courtesy, I suppose. I’ve noticed fewer and fewer places even allowing cash over debit, around here, at least.
Presumably it’s a service that doesn’t cost them much (apart from a small amount of the cashier’s time), and which may even save them a little money (because they have less cash to count and balance at the end of the day). Since it’s a useful service to the customer, they are likely to get the customer coming back to use their store again, rather than going to competitors.
The store gets charged by the security van company based on the amount of cash the store sends to the bank so the more cashback given out the less the charges. By the way a pet peeve of mine is the customer who waits until the transaction is finished before asking for cashback. That’s why we ask every customer if they want it (tedious for both cashier and customer)
And debit transactions are charged a flat fee and not a percentage so even if they take out a lot of money, it doesn’t cost the store any more. OTOH, the store runs the risk of running out of cash (not likely I assume if it’s a big store that plans ahead for this). My other concern (if we did it at my store) is that you hand some cash and it won’t appear in my (store) bank account for two days (4-5 if it spans a weekend). But again, a big store might not be as concerned with that as a small store.
Based on when I used to work at a service station. We were encouraged to give cash when we had it available because it meant less cash on the premises and therefore less risk. It cost us nothing to offer the service.
Plus, the main shopping has been done, and the customer now has cash without wandering off to an ATM, so there might always be the chance that customer, instead of simply leaving the shop, might give in to a sudden temptation to stop at the cigarette kiosk and buy some chocolate or newspapers or something. 
I find myself going to Walgreens or Wal-Mart when faced with local ATMs that will all charge service fees. Invariably I need something from the store anyway, so they get that extra bit of business… and even if I don’t need anything, buying a candy bar or other impulse item is cheaper than paying the bank ATM fee. Either way, the store got me in the door and got me to spend money.
If you needed fifty quid and could choose one store that would give you cash back for no fee, and one that wouldn’t, which one would you shop at?
I like cashback because it reduces my transaction count, and thus bank fees. I didn’t realize that it was so good for the store as well.
Me too. Why stop at a foreign ATM and get hit with $2-$3 fee when I can stop at any supermarket, get cash without the fee and pick up some bread, milk, laundry detergent, etc. while I am there?
There are lots of little services at the supermarket that don’t seem like big moneymakers, but will get you in the door. That reminds me, I have to get my auto sticker tomorrow- I’ll have to stop by the store after work! Where is my grocery list?
Don’t forget the fact that invariably, once the transaction is ready to go on the Eftpos machine, a customer may ask, “Can I have $60 out as well?” - by asking first, it probably saves some time and frustration.
When I use my debit card to get cash I’m not charged a fee.
I can use any number of ATMs, they don’t neccesarily have to be those outside or operated by my bank
Yes that’s probably the primary reason it is specifically offered. The option to add cash to the Eftpos transaction occurs at a specific point and it’s in everyone’s best interests to sort it out then.
Every retail job I’ve had has generally encouraged people to take cash out using EFTPOS, as it means less money in the till, which reduces the risk, both security-related and, just as importantly, banking error-related (stemming from mis-counting the day’s takings).
Also, you don’t have to pay anyone to take a pile of EFTPOS receipts to the bank; they can be mailed straight to the Accounts Department, saving a lot of time and headaches for everyone.
Some banks or credit unions only give you a certain number of “free” PIN-required debit transactions or ATM WDs per month before charging a per-transaction fee. If you have to use your debit card to pay for something anyway, why not go ahead and get cash back and avoid using up an additional “free” transaction. Your bank might have different rules or fee structure, but it is definitely the case for some.
Also, I can remember many years ago my parents paying at the grocery store with a check and being allowed to write the check for more than was owed as to get some cash back. So it’s definitely not a new service the stores are offering.
Finally, it sounds like some of you posting from the UK or Australia that the checkout person actually asks you this when you pay. In the states, most of the bigger chain stores have a little computer station where you swipe your card and enter your PIN and that is where you can indicate if you want cash back or not.
In the U.K., it is not normal to be charged to use an A.T.M, so it really does just come down to the various conveniences both to customer and shop that others have mentioned. I daresay that very soon one or two banks will try to change this again, and it will fail again and they will have to go back to this nice system of letting everybody use every other banks’s machines free of charge (as long as one is not overdrawn and incurring bank charges)
Haha, yes, and I have slightly guilty memories of writing cheques when I mainly hoped there would be money in my account by the time the cheque hit the bank. 
(Obviously the shopkeeper would not suffer: the bank would pay up then charge me money and all that. Sometimes worth it to get hold of some food, though, especially perhaps in a little village without an A.T.M., and if everything was about to go all dead for christmas. Come to think of it, I also recall cashing cheques at one or two pubs in town and at one of the chip shops. Bad move, really, because weeks later, I’d look at my bank statement and think “oops, £30 to a pub looks pretty bad”, even although logically I knew that only a little bit was for drinks in pub and most of it was going to be spent on sensible stuff the following day. Ah, guilty conscience. 
I now realise I am not very observant. Honestly, I am not very sure at which point they ask here in the U.K. I am usually too occupied with really madly complex stuff like “say a merry greeting to checkout assistant, grab lots of stuff, and think 'oh, good, it is all done, now I go home”. I have very little brain, clearly. I think they tend to ask when one enters the P.I.N., but I reckon it depends a lot on whether it’s a new-ish assistant going through a mental checklist of what to do and so on. I have the notion that my local Tesco seems to use a lot of part-time staff and perhaps a lot of students, so staff turnover might be pretty high. What is a bit silly, though, is that the really-too-damn-big Tesco supermarket has several cash machines just outside it AND will offer cashback, but the (cheaper and actually surprisingly good for affordable fruit and veg) LIDL does not have cash machines and does not offer cashback. However, I can pretty much see why this is so, I think - LIDL is a case of “we sell food. It is rather cheap. We do not do extra frills”, while Tesco seems to be trying to turn itself into a whole high street.
Dear me, what a rambling post. Sorry - that’s me coming down from the tiny stress of just local post office, shop and library.
Some of the newer EFTPOS terminals in supermarkets and placed like K-Mart do this, but generally the EFTPOS terminal is connected to the till so the cashier has to ask you if you want cash out so it can be added in the “Cash Out” line on the screen first.
So you’d have
*Widget: $8.99
Cash Out [Or something to that effect]: $20
Total: $28.99*
That and having the cashier ask you also maintains some kind of interaction between customer and cashier, which is a good thing, IMHO.
Celyn:
What you say about LIDL is true, ALDI OTOH offer cashback, have no ATMs outside their stores and strangely enought they don’t accept credit cards, only debit
I bought food today and asked for $11 cashback: I wanted $10 pocket money and I needed a loonie (a $1 coin) for the laundry machine.