What are alternative payment methods & why do they matter?
Have you noticed a difference in how your customers are paying online? Alternative payment methods are on the rise all over the world, and with so many options it’s important to keep up with the latest trends.
But how have did all these alternative payment providers become so popular and why should you make sure your business is offering multiple payment options to your customers?
What are alternative payment methods?
Alternative payment methods (APM), also known as local payment methods, are essentially other ways to pay that aren’t the more traditional cash or major debit cards or credit card schemes. Although they are classed as alternatives, some of them are becoming more popular than conventional methods across the payments landscape.
They include:
- Digital wallets
- Buy Now Pay Later
- Bank transfers
- Cryptocurrencies
- Wire transfers
Types of online payment methods
The use of cash has drastically declined, especially since the pandemic and the use of alternative payment methods has risen. Here are some of the most popular methods:
Debit/credit cards
As the most conventional payment option, card payments from big names like Visa and Mastercard, are accepted worldwide, so it’s a no-brainer that businesses should offer these payment methods. It’s the ideal choice for recurring payments too.
PayPal
PayPal arguably started the hype around alternative payments being one of the first digital wallets. So many others followed suit, including more digital wallets, Buy Now Pay Later schemes and cryptocurrency.
Digital wallets
Digital wallets, also known as e-wallets or mobile wallets, are one of the most popular alternative payment methods. So popular the amount of consumers using them is expected to grow by 83% by 2025! And it’s not hard to see why. You can leave your wallet behind and have all your cards in one place for quick and easy mobile payments. There are many digital wallets to choose from these days too, the big ones being PayPal, Apple Pay and Google Pay.
Buy Now Pay Later
Products and services are already at our fingertips with online payments, add in Buy Now Pay Later and there really is no stopping us. Paying in installments has become popular in eCommerce with Klarna and Afterpay being the biggest services available.
Wire transfers
Wire transfers are a bit more old school but are popular for large global payments. They are also referred to as bank transfers, which is a direct transfer of money from a customer’s bank account to the business bank account. They transfer using SWIFT and IBAN codes but although it’s not the quickest form of payment and can take more than one business day, it is a secure choice for international transfers.
Cryptocurrencies
Although a volatile currency, crypto has taken the finance industry by storm. Bitcoin may be the king of cryptocurrencies, but there are so many new coins making waves. The digital currency is also becoming accessible to make purchases both online and in-store.
Why does my business need local payment methods?
In short, it’s expected. In this day and age, it’s rare to find a retailer that is cash only. Who carries cash these days? So if your online business only accepts credit cards, you may get a similar reaction.
Everyone has their preferred online payment method and if your checkout page doesn’t offer it, at best, you could leave your customer slightly disappointed or, at worst, lose their business altogether. And with so much competition out there, consumers can easily find a more convenient checkout experience that works for them.
Every country or region has its own preferred online payment method too. So offering internationally popular payment methods can make your product or service available to those all over the world.
Advantages of alternative payment methods
Still not convinced that your checkout page should offer alternative payments? Here are a few more advantages for you to think about.
Hassle-free checkout experience
The more options you have available for your customers, the more likely you can offer them a seamless checkout experience. Availability and speed are key, and if you can provide a one-click transaction, even better!
Gain trust and loyalty
Most consumers use their preferred payment method because they trust it, especially if they can use security features like face ID to verify a payment. And if a customer trusts your website, they are more likely to keep returning.
Improve sales
Consumers are less likely to abandon their shopping cart if they can finalise the transaction in a way they are used to. Reduced abandoned carts mean higher conversion rates. It’s a win-win!
What local payment methods are popular in different regions?
Do you want global success? Understanding which payment method is the preference for each region can help your business achieve this. You also need to bear in mind that some digital wallets aren’t available in certain countries so you’ll need to make sure you provide a payment method your customers have access to.
Here are just a few local payment methods you may need to consider:
- Payment services such as Alipay and WeChat Pay are popular mobile payment methods in China for cross-border payments.
- In Germany, Giropay has a market share of more than 51% of all online transactions. Sofort is also extremely popular.
- In Belgium, Bancontact is more popular than Visa, Mastercard and Maestro.
- In 2021, 70% of online purchases in the Netherlands were paid using iDEAL.
How to integrate local payment methods
If you’re thinking about the APMs you want to offer, you’ll need to think about factors such as price, the features they have, functionality, security, and how they can make your checkout truly frictionless.
With Total Processing, you’ll have access to more than 198 alternative payment methods worldwide. Our expert team will support you in creating the best package for your business and your customers including a bespoke payment gateway with integrated digital payments to help you achieve global success.
