If you’re operating an ecommerce business, you’re likely already accepting at least a few alternative payment methods. If you aren’t, this is your sign to start. These payment options and the opportunities they open up make them an invaluable tool. They can help you boost your sales and expand your enterprise.
In this article, we’ll unpack exactly what alternative payment methods are, why they’re popular, and which ones you should consider accepting. Most importantly, we’ll take a look at the benefits that these payment methods bring for your business.
What Are Alternative Payment Methods?
Substitute, complementary, revolutionary. You may already know that these words are all synonyms for alternative, but there’s one more thing they have in common. They’re great descriptors for the payment methods that we’ll be discussing in this article.
Alternative payment methods – APMs for short – are any form of payment other than cash or major international credit or debit cards (think Visa, Mastercard, and American Express). These methods are often digital, which makes them particularly useful for businesses that sell goods online.
Although the word ‘alternative’ might lead you to think of these payment methods as being unconventional or unusual, they are simply supplementary ways for businesses to accept payments. In fact, there are some APMs that are just as well recognised as traditional payment methods.
Bank transfers, mobile payment services (e.g. Apple Pay and Google Pay), digital wallets (like PayPal, Venmo, and Payoneer), and cryptocurrencies are examples of some of the most popular APMs.
Common Types of Alternative Payment Methods
You’ve likely at least heard about all of the APMs we’ve mentioned so far. However, when you add the various regional and country-specific alternatives, there are a dizzying number of options to wrap your head around.
Although it may be tempting to try to offer every possible payment method, integrating these into your payment infrastructure can be costly and time-consuming. It’s best to start out with these common types of APMs to ensure you have a good foundation for accepting payments:
- Bank transfers: It’s all in the name here – a bank transfer takes place when money is sent from one bank account to another via a third-party payment system. For retailers and service providers, this usually happens when a customer fulfills a payment request.
- Digital wallets: The most popular APM, ewallets like PayPal and Venmo can be used to receive and store funds, make payments, and track transactions, usually via a mobile application.
- Mobile payments: Also known as NFC mobile payments, this method allows customers to make contactless payments using their smart devices (e.g. smart phones or watches). Apple Pay and Google Pay are both good examples.
- Direct debits: Similar to bank payments, direct debits involve the transfer of funds from one bank account to another. The difference is that direct debits recur at regular intervals until they’re canceled, making this a great option for subscription businesses.
- Buy-now-pay-later: BNPL allows customers to make a purchase and pay at a later date; either in a lump sum or installments – usually without interest or additional fees. Afterpay and Klarna are both popular BNPL services.
Most Popular Alternative Payment Methods By Region
More than half of global online payments are made using APMs. While digital wallets are by far the most popular way to pay, the payment methods preferred by customers differ depending on where they are in the world.
When deciding which APMs you’ll offer, it’s important to consider where you’re planning to sell your goods and services. To help you along, here are the most popular APMs by region:
Why Are Alternative Payment Methods Becoming So Popular?
Credit cards have been the darling of the ecommerce world for years, but the rise of digital technologies means that APMs are fast becoming the go-to choice for customer payments.
There are a variety of reasons why these methods have grown in popularity over the past few years. For consumers, convenience is the main motivation. Rather than having to withdraw cash, swipe a card, or enter their details via a payment portal, shoppers can use APMs to purchase goods or services with a few clicks.
In addition to simplifying the purchasing process, APMs also allow customers to pay using a variety of currencies without incurring the (usually high) fees charged by banks. Some, like digital wallets and cryptocurrencies, even enable customers to make purchases without having a traditional bank account.
There are plenty of benefits for businesses, too. Reducing friction, increasing security and expanding your potential customer base are just a few. We’ll take a closer look at how accepting APMs can help your business to grow in the section below.
5 Ways Accepting Alternative Payment Methods Can Benefit Your Business
1. Improve Your Customers’ Experience
A great customer experience is the cornerstone of a great brand. Ensuring your customers are satisfied with the service they receive and the products they purchase is one of the most effective methods for increasing customer retention and encouraging referrals. This can increase your income while reducing expenses.
Offering a variety of APMs will ensure your customers can pay their favorite way without any hassle. With Pay.com, you can choose from a variety of payment methods and easily add them to your customizable checkout page via our intuitive Pay Dashboard.
2. Reduce Processing Fees
Every time a customer pays using a credit card, you’ll need to cover the credit card merchant fees that transaction attracts. Those fees can add up quickly – and cut into your profits – when you’re making loads of sales.
If you’re looking to increase your profit margin, reducing expenses is an excellent place to start. One way to spend less money without sacrificing the quality of service you provide is by offering APMs, which generally attract fewer fees than credit or debit card payments.
It’s also wise to choose a payment service provider with a transparent, easy-to-understand pricing model. Pay.com’s flat-rate, per-transaction fees that are simple to track via our Pay Dashboard, so you won’t have to worry about any nasty surprises at the end of the month.
3. Avoid Cart Abandonment
As we’ve already mentioned, APMs simplify the payment process for your customers. Minimizing potential friction during the transaction process is one of the tried-and-true tactics for reducing shopping cart abandonment.
By giving customers control over how they pay for their orders, you make their shopping experience easier and more enjoyable. This will not only drive them to follow through on their intended purchase, but also encourage them to choose your store over one with fewer payment options.
4. Increase Security
Security is one of the biggest concerns when it comes to digital transactions. Both customers and merchants can benefit from the additional layers of security that some APMs offer.
Measures like two-factor authentication, biometric verification, or requiring usernames and passwords can help to reduce the risk of card-not-present transaction fraud. This increases shoppers’ trust in your checkout process and helps to minimize the expenses that can result from these transactions.
Whether you’re accepting credit cards or APMs, it’s essential that you work with a payment service provider that offers plenty of protection for you and your customers. Pay.com has Level 1 PCI DSS compliance and supports 3D Secure 2.0, so you can be sure that all transactions completed via our infrastructure are completely secure.
5. Access a Wider Market
Not every potential client has a credit card. If you’re looking to sell your products or services to these individuals, it’s imperative that you offer alternative ways to pay.
Consider which APMs are most popular with the customers you’re trying to reach. By offering these as options on your website, you may attract the attention of customers who favor these methods and inspire them to make a purchase from your brand over a competitor’s.
The Benefits of Working with Pay.com as Your Payment Service Provider
Adding payment methods to your checkout page is simple – you can select the options your customers prefer in just a few clicks. You can choose our no-code solutions for quick setup, or if you have a bigger team, your developers will be delighted to work with our easy-to-use API.
What’s more, Pay.com’s full-service payment infrastructure has world-class security features including 3D Secure 2.0. So you can be sure that you, your partners, and your customers are safe from online fraud.
The Bottom Line: Accept Alternative Payment Methods To Build Your Business
Giving your customers the option to pay with APMs is a reliable way to increase sales, reduce expenses, and take your business to the next level.
With exceptional convenience and added layers of security, digital wallets, mobile payments, ACH transfers, and other APMs enhance the customer experience. This reduces the chances of cart abandonment and increases the likelihood that your buyers will return to your online store for more goods or services.
Pay.com offers a secure payment infrastructure that enables you to accept your customers’ favorite payment methods in just a few clicks. Our easy-to-use system is designed to ensure that you can spend less time worrying about the nitty gritty of accepting payments and more time focusing on growing your business.