Why Your Business Should Offer Alternative Payment Methods

Not so long ago, accepting cash and credit card payments was enough to keep the business going. However, these days, organizations offering their customers only traditional payment options risk being outplayed by their competitors. Think about it: in 2021, approximately 7% of people abandoned their shopping carts because the merchant didn’t offer enough payment methods.

Thus, it is extremely important to consider alternative payment options. If your company is still falling behind, this guide is sure to be a game-changer. Here we will cover the main alternative ecommerce payment methods and explain what benefits you will get by offering them to your clients.

What Are Alternative Payment Methods and Why Does Your Business Need Them?

The term “alternative payment methods” or “APMs” refers to ways of paying for goods and services other than cash and traditional, internationally accepted credit or debit cards like Visa, Mastercard, and American Express.

Alternative Payment Types

Here is an overview of the most popular alternative payment systems used by merchants worldwide:

Online Banking

This category includes all electronic payment transactions conducted via a bank account without entering debit or credit card data.

Domestic Card Schemes

Unlike international service providers such as Visa and Mastercard, domestic card schemes are payment methods used on a local level.

Staged and Pass-Through Digital Wallets

Staged digital wallets are virtual instruments that securely store consumers’ payment information and enable them to purchase goods and services online or at points of sale. Here are some examples:

• PayPal
• Apple Pay
• Alipay
• WebMoney
• Google Pay

Pass-through wallets are mobile solutions that allow customers to conduct both POS and online transactions. Such payments are possible due to a digital token based on the physical credit card. When it comes to using this method for POS payments, a client has to bring their device close to the terminal and confirm the transaction.

Mobile Payments

As the name of this method suggests, mobile payments are transactions that customers can conduct with their smartphones. These payments include both in-app and browser-based purchases.

Pay by Link

Another noteworthy mention among alternative online payment methods is Pay by Link. Such transactions are conducted through payment links that the merchants can forward to their customers via a text message, an email, or a QR code.

Buy Now, Pay Later

When a user conducts a BNPL transaction, it means that they purchase products or services and pay for them over the course of time. This method often involves an upfront payment followed by monthly installments. Notably, during the first two months of 2021, the US shoppers’ usage of BNPL services has demonstrated a 215% year-over-year increase.

Wire Transfers

A wire transfer is a payment method that implies a direct transfer from a client’s bank account to the merchant.

Direct Debit

A direct debit, or an eCheck, is an alternative payment method that requires client authorization for the merchants to be able to withdraw funds from their account automatically. It is a convenient way for businesses to bill their customers on a recurring basis.

Benefits of Alternative Payment Systems

APMs are secure, fast, and easy to use, so it’s no wonder why many consumers find them appealing. But how can your company benefit from introducing them? Here are just a few advantages:

• Frictionless transactions. Nowadays, the average shopping cart abandonment rate is nearly 70%, resulting in $18 billion of sales revenue losses for ecommerce stores annually. These numbers are often related to a long and complicated checkout process, extra costs, and lack of payment methods available. Fortunately, offering APMs to your client base helps you tackle this issue, as every customer will be able to find the option they prefer.
• Increased customer outreach. If you are operating an international business, it is crucial that the payment options it features are accessible to your foreign customers. For instance, introducing globally recognized services such as PayPal and Amazon Pay or domestic card schemes is a great idea.
• Higher consumer trust. In 2020, credit card fraud ranked as the second most widespread identity theft type reported, after government documents and benefits-related cases. That is one of the reasons why not all customers are comfortable using their bank cards to conduct payments online. Yet, according to research, over 80% of consumers admit that trust is among the decisive factors in the buying process, so offering alternative payment methods is essential.
• Significant sales growth. With all the previously mentioned advantages in mind, it is just natural that the majority of merchants who introduce alternative payment methods into their practice experience significant revenue increases, while those who don’t are likely to miss out. Think about it: over 52% of online payments are expected to be performed using digital wallets by 2022.

How to Choose the Right Alternative Payment Methods for Your Company?

The APMs that a merchant should choose to integrate depend on a variety of factors. Here are some steps you can undertake to determine the alternative payment solutions that will suit your company best:

1. Use tools such as Google Analytics to find out where most of the users viewing your website are located.
2. Also, check the purchase data to get a clear understanding of where your customers are based.
3. Match that information with the most popular APMs used in those areas and add them to your list of potential payment options.
4. Then, compare the payment providers by pricing and functionality, and select the ones that match your organization the most.

With this simple algorithm, you are sure to expand your business’s payment options beyond credit cards and cash and get the most out of the APM integration. Alternatively, you can reach out to payment service professionals like Payneteasy for expert advice and full technical support.

Top Alternative Payment Methods by Region

To make the alternative payment methods selection process even more convenient for you, we have compiled some insights on the most popular solutions by region:

• Europe. Statistically, Europeans prefer to use digital wallets for online transactions. However, national payment methods are popular as well, like in the cases of iDEAL in the Netherlands (890 million transactions in 2020) and Payu in Poland (48% reported its use in 2021).
• North America. In 2020, nearly 30% of ecommerce transactions in the US were performed using mobile or digital wallets, while in Canada, the use of domestic banking and card payment systems is growing steadily.
• South America.While the majority of Latin Americans still prefer international credit cards and cash, APMs like payment vouchers and PayPal are also popular.
• Africa. Due to the absence of a need for a particular bank infrastructure, mobile wallets are increasingly popular in Africa. In fact, as of 2020, 55.2% of the world’s live mobile money service providers were based in Africa, with the most locally renowned ones being Orange Money and M-Pesa.
• Asia. The Asian region is the area that welcomes APMs the most. For instance, Alipay and WeChat Pay are predominant in China. Besides, it is estimated that approximately half a billion people in China will be utilizing mobile payments in 2021, with a technology penetration rate of 39%. This result is followed by South Korea and Vietnam with 29.9% and 29.1%, respectively.

How to Integrate APMs into Your Company’s Operation?

Now that you are aware of the types of alternative payment solutions out there and what their benefits are, you are probably wondering how to seamlessly integrate them into an existing business.

Luckily, there is no need for merchants dealing with APMs to single-handedly juggle all these different payment methods. Instead, you can delegate this task to expert companies that specialize in payment solutions, such as Payneteasy. This way, all of your payment gateway transactions will be easily manageable from one platform. Reach out to us now and receive a custom quote within one workday!