With the exponentially increasing popularity of online shopping, customers demand to have a choice of the payment method they will use for their purchases and seek ways of payment that they are more familiar or comfortable with.
Cash, debit cards, and credit cards are not the only options for eCommerce transactions today. Over the years, we've seen massive growth in the payments industry, with hundreds of local and global payment options being introduced as amazing alternatives to these three traditional payment methods.
We talk about some of the most popular alternative payment solutions and why they are a necessity for businesses today.
What are alternative payment methods?
Alternative payment methods (APMs) comprise all local and global payment methods apart from the conventional cash, debit card, and credit card options. They were all developed to facilitate easier payments for both customers and merchants.
APMs typically employ the latest technologies to develop payment methods that offer something new – speed, convenience, flexibility, and more – to digital shoppers and online sellers. The use of modern tech also makes alternative payment methods secure compared to the more traditional payment systems.
In this article, we will be discussing five of the most commonly used and highly preferred alternative global and local payment methods.
- Digital wallets
- Bank transfers
- Prepaid vouchers
- Local card schemes
- Cash (e-cash) payments
What are the different types of alternative payment solutions?
The different types of payment methods fall within five main categories: digital wallets, bank transfers, prepaid vouchers, local cards, and cash payments. Each region and/or country has its own popular alternative payment method, which can be used to localize the payments of an online merchant, thus offering more convenience to their customers.
The different payment types are outlined below.
- Digital wallets: Also known as electronic wallets or eWallets, these are ideal for customers who want to store their credit cards and bank accounts on their mobile device. Merchants who accept eWallets offer their customers an efficient, fast, and mobile-friendly checkout experience.
- Bank transfers: Many consumers use online banking for electronic bank transactions. Bank account transfers are highly preferred for their accessibility and convenience.
- Prepaid vouchers: In countries where bank payments or e-payments are not easily accessible, prepaid vouchers are a popular method of payment for eCommerce transactions. A prepaid voucher is a physical or virtual voucher with a unique code and represents a predefined amount of money. This method of payment is also a risk-free solution for your customers who don't want to use a credit card, or their personal details, in electronic transactions.
- Local cards: This alternative payment solution is a great way to target shoppers around the globe who prefer to pay using a local credit or debit card instead of going the major card network route.
- Cash payments: Consumers place their order online, and the payment is completed with cash at local banks or stores. Cash payments are one of the most popular payment methods within the Latin American region.
In-depth exploration of 5 popular alternative payment methods
Merchants can incorporate their online business with our payment gateway with one simple integration that enables them to process a range of alternative forms of payment. Let's discuss in detail the alternative payment solutions that we offer to our merchant partners.
Digital wallets
payabl. offers digital wallets as an alternative payment solution. Ewallets are one of the fastest-growing and most popular online payment methods, and making them available to our merchants is critical for their success.
Digital wallets available by region include:
- Europe – Paysera, Skrill, Qiwi, Zimpler
- Asia Pacific – Alipay, WeChat Pay
- Worldwide – Paysera, Skrill
Bank-to-bank transfers
Bank transfers are usually available either online or offline. In the case of online bank transfers, the shopper will be redirected to their bank's website before the completion of the payment. The payment will be performed immediately after the order is placed and the goods or services can be dispatched right away. When it comes to offline bank transfers, the shopper must access their bank account by themselves or visit a bank branch. Since this process takes time and the completion rate is much lower than that of online bank account transfers, merchants largely prefer the latter.
Bank-to-bank transfer methods available by region include:
- Europe – SafetyPay, Sofort, PayU, TrustPay, Giropay, MyBank, P24
- Americas – Itau, Banco do Brasil, Santander online payments, Bradesco, PSE, SafetyPay
- Asia Pacific – POLi, CIMB Clicks, FPX, 7-Eleven, eNETS, Krungthai Bank
Prepaid vouchers
Consumers obtain prepaid vouchers by physically visiting participating stores or through online channels in exchange for cash or other payment methods. Prepaid vouchers include a unique code, which the customer can then input onto a payment page at check-out to make a payment and complete their transaction.
Prepaid voucher methods available by region include:
- Europe – paysafecard
- Americas – paysafecard
- Asia Pacific – paysafecard
Local cards
Local card schemes are a great way for merchants to enter markets with low credit card coverage. Customers consider local cards a trusted payment method because they are based on language and currency localization.
Local cards available by region include:
- Europe – Bancontact
- Americas – Argencard, Cabal, Cencosud, Naranja, Nativa, Aura, Elo
- Asia Pacific – UnionPay
Cash payments
Cash-based payment methods are in effect a way to pay for online purchases through an offline channel. How they usually work is that at the checkout page of a website, the customer will select a cash-based payment option, and will be issued a document with a barcode or unique reference number to identify their payment. The document must be printed (or shown on-screen) by the customer and presented at any retail location participating in the cash-based payment scheme. Following this, the document is scanned, and the customer will pay for it, in most cases, using cash. Once the payment is confirmed to the merchant on whose website the order was made, then the products are shipped to the customer.
Cash-based payment methods available by region include:
- Europe – Maxima, Narvesen, PayPost, Perlas Terminals
- Americas – Pago Facil, Rapipago, Boleto Bancario, Baloto, Banamex, Banco de Occidente, Carulla, Efecty, EDEQ, Surtimax, BBVA México (formerly BBVA Bancomer), OXXO, Santander Cash Payment, Redpagos
- Asia Pacific – 7-Eleven, SingPost, Tesco Lotus
Why is accepting alternative payment methods necessary for businesses?
Until recently, credit cards were the most popular payment method used for online shopping. According to Statista, debit or credit cards were the most popular online shopping payment method in Denmark in 2021, used by over 50 percent of the respondents. In the United Kingdom, in January 2024 alone, almost 78 million online credit card payments were made, as reported by UK Finance.
While credit cards still remain one of the primary methods of payment for online purchases, consumers have eagerly switched to other forms of payment in the past few years. One alternative payment method, in particular, seems to have been doing exceptionally well. Digital wallets have stolen the credit card's top spot. According to a global 2023 report by Oberlo, digital wallets accounted for over 50% of total eCommerce spending, compared to only 22% via credit cards. Out of the many digital wallet options available, Alipay had the largest market of 1.3 billion users as of 2023, according to a report by Tech Wire Asia. It was closely followed by WeChat Pay, while Apple Pay and Google Pay ranked third and fourth, respectively.
Such developments have led merchants to incorporate a range of alternative payment solutions – not just digital wallets – into their checkout pages. Based on the geographic region your customers are located in, you can utilize different APMs to satisfy their payment expectations. For instance, people in one country might find bank transfers best, whereas another could favor eWallets for online shopping. This highlights the importance of accepting alternative payment methods when operating an online business, especially an eCommerce one.
Other benefits of offering alternative payments include:
- Faster payment processing
- Greater flexibility and adaptability to customer preferences
- Mobile-friendliness
- Wider local and global reach
- Smoother checkout experience
- Higher customer satisfaction
- Boost in revenue
- Lower transaction costs
- More security
Partner with payabl. to accept alternative payment methods
In a modern world where alternative payment solutions are common, combined with the rapidly expanding online shopping industry, the need for online payment services is obvious. Add to this the need to simplify the process for merchants while providing alternative payment solutions to capture the largest market share possible.
This is precisely why payabl. can play a very important role in assisting merchants to better navigate the local payment methods required for their chosen industry. Partner with us to build a varied payment strategy for your customers.