How do cashback/rewards work?

Cashbacks received from various offers/scratch cards are added to your Gift Card balance. You can use this amount for recharges, bill payments, gold or silver purchases, payments to merchants online and at stores. 

Few points to note:

Important: If an order is cancelled or a transaction fails, any cashbacks/rewards earned for making this transaction will be adjusted against the refund amount (if any). In other words, Refund amount = Transaction amount - Cashback credited

Example: Transaction Amount = ₹1,000, Cashback = ₹100 => Refund amount = ₹900

Related question(s)
What is the validity of a cashback I receive on PhonePe?​​​​​​​