Our Transportation department gives certain customers a 5% discount up front on their bill, and then later (twice per year) will issue them a check for another 5% rebate if they are still an active customer and continue to use our hauling services.

Would the 5% rebate payment be 1099 reportable?  I'm not sure if this should be considered a refund, which wouldn't be reportable, or if it should be considered income since they have to meet certain criteria in order to get it (i.e. be an active customer). 

If it is reportable, would it go in box 3 (Other) since it's not really compensation for any services performed?