Off-hand spoiler: according to the World Payments Report 2020, the rise in e-commerce and alternative payment methods is expected. The world economy is steadily driving towards the cashless model.
Sure, the COVID-19 pandemic deserves a particular focus on this matter. Due to the pandemic crisis, cashless payments became a must for market competitiveness. Although debit and credit cards still stand at the head of popular online shopping tools, other payment methods are starting to outperform. Users prefer to pay easily and quickly, so digital wallets, QR-codes, mobile apps, prepaid cards, etc., have become widespread. Intensive growth in the number of consumers who prefer to use mobile devices for shopping on the Internet, instead of traditional online shopping, using a computer or laptop, also fueled this trend.
What are alternative payment methods?
Alternative payment methods (APMs) represent any form of payment that is not any major credit/debit card scheme or cash. Simply put, it’s an ability to pay for goods and services in other ways than traditional ones. New technologies allow customers to take advantage of existing online banking, digital wallets, and even smartphones to make payments using biometric data, which increases the popularity of APMs.
E-commerce alternative payments methods
The APMs can be roughly divided into three groups:
These are mobile transactions and e-wallets for online payments, like PayPal or Alipay. Electronic wallets are convenient and secure, and you can replenish your wallet in various ways. Almost anyone now uses a mobile device, which becomes a wallet. Such payment methods are gaining popularity due to their convenience and ease of use.
Bank transfer, wire transfer, or credit transfer
This is when money moves from one entity or person to another. Payments via bank transfer require buyers to confirm the transaction with the online bank. The popularity of bank transfers is growing at almost the same rate as the popularity of e-wallets.
There are two types of cash-in: prepaid cards, which run on traditional platforms such as Visa and Mastercard, and prepaid accounts, which work the same as prepaid cards but operate outside the credit card system. You must replenish the cash-in card in advance to make a payment, and the available funds on the card are the spending limit.
Choosing payment methods: new consumer behaviour trends
According to the survey of Capgemini, the world pandemic recalibrated the consumers’ behaviour in the matter of payment method choice.
- 41% of cash users tried a contactless card;
- 35% of card owners added it to a digital wallet (the reasons for that are speed, convenience, and ease);
- 27% of customers experimented with QR-code payments (2 out of 5 people aged 40+).
The top two factors that motivate users to opt for QR codes or digital wallets are the speed of transactions and the convenience of paying anytime and anywhere.
Alternative payment methods leading regions
- Asia-Pacific region — 58%
- Europe, the Middle East, and Africa — 49%
Accepting alternative payments
Customers tend to use alternative methods to pay for purchases online quite often. For instance, alternative payments make 49% of the total annual volume in Europe, the Middle East, and Africa and about 58% in the Asia-Pacific region. If merchants do not offer their clients alternative payment options, they might lose 20% to 30% of sales. Supporting e-commerce alternative payment methods is an essential advantage for those who plan to expand business abroad.
The tricky thing about alternative payments providers is that they tend to be local. So, it would be just perfect if you offer your clients their preferred ones.
Here’s the list of the most used payment methods in the world.
Choosing alternative payment methods for your business
Accepting alternative payment methods is an opportunity to grow your sales and gain more customers. So, it would help if you were conscientious about choosing the right ones to provide the smoothest online shopping for your customers. Here are the steps you can take right now.
Step 1. Define if your business requires it
Here are the market segments that require alternative online payment methods — check if your business is among them.
- Forex, binary options
- Gambling, betting
- SMM agencies
- Digital goods & Video games
- Game marketplaces
- Dating websites
- Freelancers, web-design studios, IT teams
- Professional service
- Info business, training
If the answer is “yes”, move to the next step.
Step 2. Consider these criteria while choosing what methods to support
To decide what payment methods suit your business best, answer the following questions:
- Is this method as affordable as beneficial?
- Will the clients’ data remain secure?
- Is it easily accessible to your target market?
- What about the contract term?
- Is it easy to use?
- Does it have proper feedback and online reviews?
Alternative payment methods represent a bridge between an online business and a specific group of its consumers. And they are all about the ease of use, functionality, and benefits for both sellers and buyers. If your online store doesn’t accommodate any APM, you’re bound to miss out on sales. If your business’s target audience often opts for specific methods, accepting payments in them might help you expand your sales. So, alternative online payment methods are rather an advantage for your store or website than a must.
We at Corefy are on the outlook for modern e-commerce trends — our payment orchestration platform allows merchants to accept the most sought-after payment methods. We are constantly expanding the list of methods, making accepting payments in online stores, websites, services, and mobile applications even more convenient.
Suppose you are about to boost your local sales and expand abroad. In that case, we’ll be excited to help you optimise your business opportunities and start accepting alternative payment methods quickly and hassle-freely. Do not hesitate to reach out to our team or book a demo.