Correct, due to price fluctuations a buffer would need to be built-in. Limit would be based on 90-95% of Bitcoin value currently, however this may not be necessary.

Consumers would earn 4% back on purchases. Once a certain level is reached (.02 Bitcoin increments for example) they can be redeemed and will be transferred to the consumers Wallet. This is possible due to the traditional 1% cash-back and typical charge-backs will not be processed as typical cards.