A nice explanatory video from Cashrewards on how cashback works (one of the cashback sites listed below.)

Some retailers (the merchants), that you purchase from are willing to pay “commission” to affiliate networks and other website publishers to gain sales. As a website publisher themselves, the cashback website is rebating/refunding a portion of their commissions (that they've made from the merchants) back to their customers (you).

For example Cashrewards are currently offering 1% cashback for purchases from eBay.

1. Go to Cashrewards eBay page, while logged into Cashrewards.
2. Click on “Go to store” and you will be redirected through the affiliate network to eBay's website.
3. Make a purchase at eBay (e.g. a $800 Vacuum Cleaner).
4. Your transaction will be logged at the affiliate network. eBay will pay commission to the affiliate network sometime in the future after it's confirmed and shipped.
5. The affiliate network will then pass on the commission to Cashrewards.
6. Cashrewards will then match that amount to their own transaction log, and pay $8 to your account, shown in your Rewards Page.

Since the purchase price from eBay in (3) will still be the same regardless of whether a commission is paid, it is advised to use a cashback/commission-refund site to make your purchases as often as possible.

Note: Whilst examples on this page are using Cashrewards, you should do your own research to determine which provider is best for you and is offering the best rate for the store you are planning to purchase from.

Currently OzBargain lists cashback offers from 3 cashback sites:

• Cashrewards
• ShopBack
• TopCashback AU