Are Alternative Payment Methods Better Than Credit Cards?

Alternative payment methods top credit cards in many markets when it comes to customer popularity. Explore how accepting APMs could benefit your business.

Credit and debit cards were once the most popular ways to buy online and in person, but many customers now prefer alternative payment methods (APMs). APMs, which allow payment without a physical card, include electronic bank transfers and digital wallets like PayPal.

As new payment options rise in popularity, customers increasingly expect to see them when buying online. Accepting APMs at checkout can increase your sales and even give you a competitive edge over companies that don't take these methods. 

In this guide, we explore the pros and cons of various APMs. Understanding how these methods compare to credit cards can help you decide whether they make sense for your business.


What Are Alternative Payment Methods and Why Do They Matter?

The term alternative payment method applies to any option outside traditional methods like credit cards, debit cards, checks, and cash. If a payment method doesn't fall into one of those categories, it's an APM. 

Although the word alternative suggests that APMs aren't the norm, they're actually more popular than credit cards among many demographics. That's why it's so important for your company to accept these payment methods.

Different Types of Alternative Payment Methods

Digital Wallets

These apps give customers a convenient way to pay online. Users can add funds to the digital wallet with a bank transfer or connect it to other payment accounts. Customers can also save virtual versions of their credit and debit cards and make peer-to-peer payments. 

Common digital wallets include PayPal, Google Pay, and Apple Pay. Most wallet apps support contactless payments with the customer's smartphone or smartwatch.

Electronic Bank Transfer

Customers can buy products and services through electronic bank transfer (EBT) without entering debit or credit card details. Instead, they use the bank account number and routing number to initiate the purchase. Then, the customer's bank provides approval and sends your bank the funds. Businesses often use EBTs for automatic debits, like for recurring subscription payments.

Buy Now, Pay Later

Consumers can divide payments into several installments through popular buy now, pay later (BNPL) services. These apps typically offer flexible, no-interest financing without fees as long as the person makes payments on time. Examples of BNPL platforms include Afterpay and Klarna.

Prepaid Cards

Customers can buy prepaid cards loaded with funds they can use to buy in person or online. These cards often allow users to add more money through an online bank transfer. Prepaid cards are popular among people who don't have traditional bank accounts. Gift cards also fall into the prepaid card category. 

Local Payment Methods

Some APMs are specific to a certain country or region. Depending on the area, these local payment methods can include digital wallets, mobile payment apps, EBTs, and BNPL services.

Not all local payment methods are APMs. For example, banks in other countries may issue designated credit cards for customers in one geographic area.

The Advantages of Alternative Payment Methods

Ease and Convenience

APMs make it easy to create a positive purchase experience for your audience. Customers appreciate the accessibility and ease of APMs. They can use these methods to make fast payments from anywhere. 

This convenience prevents checkout friction, which can help you reduce cart abandonment. Browsers are more likely to convert when they see digital wallets and BNPL services they already use. They may appreciate the option to keep card numbers private with APMs.

Increased Sales With M-Commerce

M-commerce includes transactions that take place on a smartphone, tablet or smartwatch. It's one of the fastest growing areas of ecommerce, with a market value of about $430 billion in the US alone. 

Most APMs have apps and mobile sites, so accepting these methods is an easy way to tap into this valuable sector. You'll likely see sales increase if you add APMs with m-commerce capabilities to checkout.

Expanded Audience

Accepting APMs connects you with local customers who don't use debit and credit cards online. You can also expand reach to international markets, including many countries where people prefer to buy with digital wallets and other APMs. supports fast, seamless global payment processing for your customers worldwide.

You can also connect with customers who don't use traditional banks. Many consumers exclusively use APMs to buy online, especially in China and throughout southeast Asia. If you don't accept these methods, you won't convert this potentially large portion of your market.

High-Tech Security

Alternative payment methods provide strong security through features like biometric identity authentication with a user's face scan or fingerprint. End-to-end transaction encryption protects payment information during transit so it can't be intercepted and used for fraud.

The Drawbacks of Alternative Payment Methods


Some APMs add costly fees for the merchant or consumer, often charging a percentage of the transaction rather than a flat fee. Examples include service fees, fees for international transactions, processing fees and withdrawal fees. Even small charges can become quite expensive over time.


Although many APMs are available everywhere, others limit your audience to a certain geographic area. You can attract the largest market by accepting many different payment methods including both traditional and alternative options. 

Security Flaws

APMs generally have strong security, but fraud can still occur. For example, someone could obtain a user's digital wallet credentials through phishing or steal a mobile device to use at checkout. Adding new payment methods requires attention to new forms of fraud.

Lower Recognition

It's also important to make sure APMs make sense for your audience. If most of your target market hasn't adopted these payment methods, you may want to stick with credit cards. Adding unfamiliar payment options could add unwanted friction to the checkout process. This can also occur if you offer too many different payment methods that don't apply to your audience. 


Consumers may have a negative opinion of some APMs. For example, they might steer clear of a payment method that's been in the news for a data breach. You should be aware of negative coverage about APMs you accept at checkout. 

Are Alternative Payment Methods Better Than Credit Cards?

Alternative payment methods aren't necessarily better than credit cards since people have different buying preferences. They might also use a card in one scenario and switch to an APM for another type of purchase. 

Your company can attract more customers by offering multiple payment methods at checkout. You'll increase the chances that your visitors will see trusted, familiar ways to pay, a key factor in conversion.

The Best Way to Accept Alternative Payment Methods is the best way to accept alternative payment methods, including digital wallets and other customer-preferred options. You can select from a variety of payment options to cater to the expectations of your target market. 

If you already have a thriving ecommerce store, it's easy to integrate with your existing online experience thanks to our developer-friendly API. We also have easy-to-use no-code tools so you can customize your checkout and start taking payments quickly.

Click here to get started with now!

The Bottom Line

Customers want to see their preferred payment methods when they buy from your brand. As APMs become the most popular methods in many markets, your company should consider taking digital wallets, EBTs, and other alternatives at checkout. makes it easy to accept multiple methods of payment. You can add new options, including popular APMs such as PayPal, at the click of a button. We charge an affordable flat rate for each transaction, with a transparent Pay Dashboard where you can see every charge.

Click here to create your account now!


How can my ecommerce business accept alternative payment methods?

Your ecommerce company can accept APMs by signing up for You'll be able to take multiple payment methods including digital wallets and ACH transfers. We also support traditional payment methods such as credit and debit cards, so you can appeal to the widest possible audience.

Why are alternative payment methods important?

Alternative payment methods let customers buy online without sharing private credit card details. They're also more secure than physical payment methods like cash and credit. Many customers prefer the speed and convenience of newer payment options such as digital wallets and buy-now-pay-later apps.

What are people using instead of credit cards?

Many people prefer payment methods other than credit cards. The most popular alternative payment methods include digital wallets like PayPal, mobile apps like Google Pay and Apple Pay, and electronic bank transfers. Many countries also have their own local APMs.

What is the most popular alternative payment method?

Digital wallets are the most popular alternative payment method. Customers spent more than $3.4 billion using this APM in 2022 alone. Many people like digital wallets because of their ease, security, and accessibility. This method will likely grow in popularity with a projected market value of $5.2 trillion by the end of 2026.

Meet the author
Andrea Miller
Andrea Miller has been a writer and editor for more than two decades. Specializing in business and finance, she has written for some of the major websites in the financial sector. Outside of work, she spends most of her time with her family and enjoys hiking, yoga, and reading.
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