Alternative payment methods (APMs) in e-commerce
23 July
What are the three methods of payment? Cash, credit, and payment-in-kind. That’s what many businesses and consumers think are their options.
But in recent years, a disruptor to the finance market has seen new types of payment methods take off in popularity.
These are called alternative payment methods (APMs).
So, should you be interested in APMs? Could they streamline your finances? And could they help your business scale-up and succeed? Read on for all the essential details.
What is the most common method of payment?
Right now, credit cards are the most popular payment method—at least in the US. In 2020, some 38% of all payments were made in this way.
Debit cards were the second most popular option. Credit/debit cards have a 50% market share in the Americas.
However, there’s a notable difference around the world. In China, for example, WeChat pay is the most common payment method. It accounted for 92% of payments in 2018.
Elsewhere in the world, this mobile-first approach would be considered an APM. So how many types of payment methods are there? Customers can pay in over eight ways, but it does vary by country.
As a business, then, it makes sense to have a wide variety of payment options available for your customers.
What are alternative payment methods?
An alternative payment method (APM) is any form of payment that’s not a cash or credit/debit card. They’re also sometimes called alternative methods of payment (AMOP).
With the advent of the internet, and the digital era, APMs are soaring in popularity and consumers/businesses now have more choice than ever before.
So, you may wonder what’s the best payment method available? The truth is you have an excellent selection available and they all suit one need or another.
For example, you may choose to pay for goods in a store using a debit card or digital wallet. If you’ve moved beyond carrying your cards and cash around with you all the time, then your digital wallet will be the best option.
But it entirely depends on the preference of consumers.
However, credit card alternative payment methods are growing in popularity.
And usage of alternative payment ways provides new opportunities and greater flexibility. Businesses may want to consider a wide range of APMs to provide customers with payment options that suit every need.
What are the alternative payment methods available?
The types of alternative payment methods include:
- Digital wallets (like FasterPay’s)
- Mobile payments
- Bank transfers
- Prepaid cards
- Money orders
- Cryptocurrencies (such as Bitcoin)
Alternative online payment methods allow you to send and receive funds across the world.
That’s great if you’re a consumer looking to buy products in other countries. But what about businesses? How can they take advantage of APMs?
Examples of alternative methods of payment
If you’re still wondering how APMs apply in the world of finance, have a read below for some common examples of
- Using a digital wallet to pay for a good or service in an online store.
- Using a digital wallet to pay for a product in a physical store.
- Making a mobile payment.
- Making an in-app payment.
- Using a prepaid card to make a payment in a store.
You can also consider cryptocurrencies as an alternative method of payment.
However, they don’t work in the same way as paying with a digital wallet and isn’t readily available to consumers.
Should your business use alternative payment methods?
Alternative payment methods e-commerce are a surefire way to improve your sales.
Building a business case for accepting alternative payment methods depends on the industry you’re in and whether you’re looking for global customers.
As an example, many e-commerce and SaaS businesses scale up to a point where they want to move into international markets.
One of the challenges with cross border e-commerce is with the various payment requirements all across the world. In the past, simplifying that was difficult and businesses would often miss out on expansion opportunities.
With APMs, there’s now every opportunity to expand. And this offers merchant advantages and consumer advantages.
As a merchant, you can benefit in ways such as:
- Gaining additional recurring revenue: Reduce churn rates with convenient and secure payment options your customers will trust.
- Becoming a globally relevant brand: Don’t limit your checkout experience, offer localized payment options for all of your customers—wherever they are in the world.
- Increasing consumer trust: Card payments aren’t always preferred by customers, so offering many reputable alternatives can build their confidence when shopping with you.
- Speeding up your transactions: APMs provide a faster and more secure checkout process. Plus, customers don’t have to fill out lots of information to complete a transaction.
In fact, it’s something of a necessity these days. Why does your business need alternative payment methods? As your customers will expect them.
And if you’re not offering a wide variety of payment options, you can increase churn rates as customers leave your checkout. All because the right payment method isn’t available.
What makes alternative payment solutions appealing to merchants?
APMs have immediate appeal for businesses as they can help you to scale-up locally or globally.
They also provide your customers with more options for making payments. APMs also provide:
- Less payment friction.
- Better chance to localize in new markets.
The consumer shift toward digital wallets is another big reason why your business should consider APMs.
More and more people across the globe are turning to digital wallets as a means of payment. Particularly in Asia—in China, they’re rapidly becoming the go-to payment method.
And this will only increase over the next decade.
So, by taking up APMs you’re setting in progress the future-proofing of your checkouts. And this can set your business on a long-term path of success.
Which alternative payment systems are right for your business?
Whether you’re an SME or larger business, choosing the right APMs will help your business to scale up and succeed.
For example, we offer these systems in the form of FasterPay Payments and FasterPay Payouts. These offer easy, fast, and secure methods of pay across worldwide markets.
Basically, it’s the full set of features that combine to provide you with the best systems for your business. And you can pick and choose which to use with your local/global customers.
It’s easy to integrate FasterPay into your checkout. And you get these features:
- Local credit card processing for all merchants.
- QR code-based payments for physical merchants.
- Chinese, Indian, Russian, Global Payment Methods provided to physical locations.
- Local payment methods from all countries are provided as part of FasterPay online payments.
- Cross-border payments for all global merchants supporting e-commerce and digital merchants alike.
You can check out the FasterPay pricing fees to get a better understanding of how much we’ll charge you for our platform.
So, should you add alternative payment methods to your business? Yes, absolutely. They provide you with a secure and varied set of features for consumers to take advantage of.
It means you can increase your sales, decrease churn rates, and build trust with your new and regular customers.
We have a business guide for using FasterPay if you want to find out more about how we can grow your business.
What is the safest method of payment?
Businesses need to make their checkouts as secure as possible to build consumer trust. There’s no outright safest option to offer, but the most secure available include:
- Credit and debit cards.
- Credit cards with EMV chips.
- ACH payment (US only).
- Payment apps (such as the FasterPay digital wallet).
Alternative payment methods for businesses need to be secure, so you can build trust with your customers by offering a wide selection of methods.
- The more at home your customers can feel when paying for goods/services, the greater chance you have of reducing checkout churn rates.
- What’s the Future of Alternative Payment Methods?
- APMs, despite their “alternative” reputation, are likely to become the norm in the decade ahead.
The APM market has expanded at an incredible rate and will unquestionably continue to do so. Younger generations enamoured with their devices are much more likely to adopt more convenient payment methods over traditional cash, cards, or checks.
We can already see the popularity of mobile payments in China. There are more Alipay users than bank account holders.
This level of adoption should sweep across the world as the convenience of digital wallets becomes readily apparent to more consumers.
Cards and cash are here to stay (for now), but there’s a definite end to their lifespan on the horizon.
FasterPay’s APM services
Now you know all about alternative payments, why not give a digital wallet a go?
Setting up your FasterPay e-wallet is safe, secure, and easy. You can find our app for free here:
You can also create a desktop account, either a FasterPay personal or business account.
Any questions? We have our 24/7 customer support team waiting to answer them: support@fasterpay.com.
