These kind of incentives are considered taxable income. The merchant usually issues a form 1099-Misc and you report it as "other income". Other income and interest income are both ordinary income and taxed at the same rate.
They did you a small favor, as interest income is a lot easier to enter in TurboTax than 1099-Misc. The usual gripe we hear, here, is that taxpayer/TT user has to upgrade to enter the 1099-Misc.
