Alternative payments are quickly gaining popularity around the world, which means business owners selling worldwide need to offer a variety of payments to their customers. According to a WorldPay report, by 2017 alternative forms of payment will account for over half of all Internet payments, and online card payments will drop to 41 percent. The same report showed, alternative payment use will not be restricted to one area of the world, either. Increases in the amount of alternative payment transactions will occur in the U.S. and Canada, Europe, Latin America, Asia and Pacific as well as Africa and the Middle East.
Alternative payments are taking hold for good reason. In general, they are safer, more globally relevant and in some cases simpler, than other forms of payment. Depending on the type of alternative payment, the checkout process can be more streamlined than with traditional credit card payments, which means it's easier for the customer to make a purchase. This can be extremely useful to a business that suspects cart abandonment is due to the checkout process. It is also useful for recurring payments for anything from rent and utility bills to subscription payments.
According to Fierce Markets, while the surge in alternative payments is primarily confined to B2C online purchases, they are also being used for B2B payments. The B2B e-commerce market has grown dramatically in the last few years and is expected to continue to expand. Forrester Research reported that by 2020 the B2B e-commerce market will be over $1 trillion.
Alternative payment methods
While alternative methods of payment are important worldwide, it can be easy to forget that this one term actually encompasses many ways to pay. Here are some alternative payment methods:
- Bank transfers:
This payment type allows merchants an immediate payment authorization through the customer's bank account. The payment is fully settled within one day in most cases.
- Direct debit:
A good choice for low or recurring payments, a direct debit is an automated payment where a merchant takes money directly from the customer's bank account.
According to WorldPay, e-wallet payments are the fastest growing payments in the world. An e-wallet holds a certain amount of money that makes a direct payment to the merchant in the amount needed. E-wallets can be used online and in-store.
These payments are made with a mobile phone. They can either be direct payments through the device or through the use of a mobile wallet, which is essentially an e-wallet.
- Cash on delivery:
When a cash payment is collected by the courier upon delivery, it's called a cash on delivery payment.
- Local cards:
Different areas of the world will have different cards specific to the area. These mostly operate like standard credit or debit cards, however, some will be more sophisticated than others.
With the pre-pay method, customers add money on a card or voucher and use it to complete the transaction.
When a customer uses post-pay, they make a payment at a physical store after making a transaction on the Internet.
- Digital currencies:
While there are barriers to digital currencies, such as Bitcoin, they are gaining traction. However, these currencies are not backed by governments or central banks and are not linked to other forms of currency.
While a merchant doesn't have to offer all of these forms of payment, it is smart to offer a few of them, as well as traditional credit and debit card processing.
Brought to you by PacNet Services, your one-stop global payment processing solution.