The world of online shopping and business is changing — and to find success in the modern world, merchants must change with it.
Alternative payment methods are the future of online transactions, offering customers convenience and accessibility while ensuring top-notch security is still upheld. For merchants, alternative payment methods offer a slew of benefits, from fewer transaction fees to boosted sales.
What is an Alternative Payment Method?
An alternative payment method is a term to describe any payment method that does not involve the use of cash or major credit cards (Visa, MasterCard, etc.).
In the last decade, alternative payment methods have grown immensely in popularity. This growth was significantly accelerated after the onset of the Covid-19 pandemic when online and in-person businesses alike began prioritizing digital payments and other online business methods over traditional brick-and-mortar practices.
Examples of alternative payment methods include:
- PayPal: As one of the most popular alternative payment methods currently available, PayPal lives in a category of its own. Along with being a digital wallet, PayPal is also a money management platform that allows for sending money, receiving money, storing funds, shopping online, and more.
- Direct Online Bank Transfers: These days, some of the most convenient and instant alternative payment methods available are direct online bank transfers. There are many different providers for this type of APM including iDEAL in the Netherlands, SEPA (Single Euro Payments Area) payments, and PIX in Brazil.
- Mobile Wallets & Payment Apps: Consumers are growing more accustomed to mobile payments, especially as mobile wallet and payment app technology become more advanced. Major examples of this type of APM include Venmo, CashApp, Apple Pay, and Google Pay.
- Buy Now, Pay Later: Buy Now, Pay Later (BNPL) rivals PayPal for the fastest-growing alternative payment method. BNPL services are interest-free installment loans in which a customer can pay for a product or service in several (typically four) smaller payments, while the merchant or business is paid in full by the BNPL provider. One of the biggest BNPL providers today is Klarna.
- Cryptocurrency & Blockchain-Based Transactions: Though cryptocurrency and blockchain technology still have their pitfalls, it is becoming increasingly widespread as more consumers and businesses alike adopt this payment method. Some of the cryptocurrencies most widely used as payments include Bitcoin and Ethereum
There are a variety of reasons why a customer might prefer an alternative payment method over a more traditional cash or card payment, including:
- Convenience: Payment methods like Apple Pay and CashApp have grown so popular that they are nearly commonplace, with both in-store businesses and online marketplaces accepting these options as payment methods. By using these methods, customers can carry out transactions with the tap of a button, eliminating the need to carry around cards or cash.
- Security: Alternative payment methods often have added layers of security. This can be an especially important and appealing factor for customers who shop online, as paying through a platform like PayPal or Google Pay alleviates the customer from having to enter their card information. They also don’t have to worry about their information potentially being leaked or stolen.
- Accessibility: Depending on where your customers are geographically located, they may not have access to traditional banking services. Alternative payment methods give the unbanked or underbanked greater access to financial services without the need for a traditional bank account, allowing them to make purchases, enter into business relationships, and more.
Why Should Online Merchants Offer Alternative Payment Methods?
There are many reasons some customers may prefer alternative payment methods over traditional ones. This highlights one of the most important considerations for any merchant considering enabling APMs — with these payment methods you can gain access to a wider and more global pool of customers.
This is especially important for merchants looking to expand their business internationally. Not only can alternative payment methods make it easier to do business with international customers but also with international suppliers, fellow merchants, business partners, and financial service providers.
With this in mind, let’s dive into more of the benefits merchants can gain from offering alternative payment methods:
- Boosted Revenue and Sales: When you offer customers more ways to pay, you increase the chances of closing a sale. Alternative payment methods allow you to reach a wider, more diverse audience and customer base, ultimately leading to an increase in sales and revenue.
- Lower Operational Costs & Fees: For both the customer and the merchant, there can be hefty fees associated with traditional credit card transactions. Alternative payment methods offer one of the best opportunities to sidestep some or all of these fees, which can reduce your overall operational costs. As a result, customers can also enjoy lower transactional fees, as there are fewer overall costs you need to cover per transaction.
- Seamless Checkouts: Many alternative payment methods offer some of the fastest transaction speeds available today, making it easier to provide a seamless checkout experience to customers. This is incredibly important, as pain points in the checkout process can often lead to abandoned shopping carts.
- Enhanced Customer Experience: Allowing customers to pay in their preferred methods is a great way for merchants to show that they respect and listen to their customers. With alternative payment methods enabled, customers can enjoy affordable financing — like BNPLs — that allow them to pay in installments without the merchant losing revenue.
How Can Online Merchants Enable Alternative Payment Methods?
At Spreedly, we offer a global ecosystem of payment services.
Our powerful API connects merchants to virtually any payment service and can carry out transactions in more than 100 global currencies.
With new payment methods constantly arising and evolving, adding our orchestration layer to your payments stack ensures you can offer the right mix of methods for your customers, regardless of the complexity of their needs.
In addition to a vast network of payment services and options, Spreedly also offers merchants:
- Experimentation: Spreedly allows merchants to easily mix and match different payment options to find what works best for their business. By doing so, merchants can experiment with different combinations to see how they can potentially improve success rates, add to revenues, and boost flexibility.
- Transparency: With Spreedly, merchants have access to a rich host of reporting and data tracking tools to allow for smooth reconciliations. Plus, the Spreedly dashboard allows for payment activity monitoring, payment method management, payment processing, and more.
- High Success Rates: We bring deep insights into global authorization rates to our clients, enabling merchants to route transactions to the ideal payment services based on each merchant’s unique business goals. Spreedly also orchestrates fraud solutions that suit each merchant’s payment strategy, allowing merchants to avoid false declines.
- Payment Method Optimization: Frictionless checkouts are a must for online merchants. Spreedly’s Account Updater and Network Tokenization tools ensure that all cards stay current and that stored payment methods are evergreen. Moreover, we offer an array of local and alternative payment methods, allowing merchants to offer customers the exact payment methods they want and need.
Key Takeaways: Protect Your Payment Methods with Spreedly
Spreedly is PCI compliant, meaning our clients and partners have the top-notch security needed to offer a full range of alternative payment methods. Our payment orchestration platform makes it simpler to add the ideal mix of payment methods, integrations, and more to your payment system.
Plus, the ability to experiment with all the different options available through our platform ensures you always have the right options needed for growth and the high-level flexibility to keep up with evolving customer needs.
From cardholder data protection to corporate-level security, we’re making payments easier for everyone.
Contact our sales team today to get started.