Process Payments with Alternative Payment Methods
What are alternative payment methods?
Alternative payment methods (APMs) are non-traditional payment options that differ from the conventional credit and debit card transactions. They offer consumers more convenience, security, and flexibility when making purchases online or in-store. Some of the most popular alternative payment methods include:
- Digital Wallets: Also known as e-wallets or mobile wallets, these services store users' payment information securely and allow them to make transactions using their smartphones or other devices. Examples include PayPal, Apple Pay, Google Pay, and Samsung Pay.
- Cryptocurrencies: Digital or virtual currencies that use cryptography for security and operate independently of central banks. Bitcoin, Ethereum, and Litecoin are well-known examples of cryptocurrencies, and they are increasingly being accepted by merchants for online transactions.
- Buy Now Pay Later (BNPL): A financing option that allows customers to make a purchase and pay for it in installments over time, often without interest or fees. Some popular BNPL providers are Afterpay, Klarna, and Affirm.
- Direct Debit or Bank Transfers: Electronic payment methods enable customers to transfer funds directly from their bank account to the merchant's account. Examples include ACH transfers in the US, SEPA transfers in Europe, and Faster Payments in the UK.
- Local Payment Methods: Country or region-specific payment options that are preferred by customers in specific markets. Examples include iDEAL in the Netherlands, Boleto Bancário in Brazil, and Alipay in China.
- Prepaid Cards and Vouchers: Customers can purchase these cards or vouchers with a predefined value and use them for online transactions. Examples include Paysafecard, Neosurf, and Flexepin.
Why are alternative payment methods important for ecommerce?
To stay competitive and meet the evolving needs of customers, digital platforms must offer a variety of online payment methods that cater to their preferences. This includes accepting local payment options, which is a valuable way to use alternative payment methods to your advantage in cross-border payments. By doing so, you can attract customers in regions where credit and debit cards are less common, differentiating your business from competitors and increasing your global presence. In addition, offering a range of payment options can also help you improve conversion rates by up to 2% and reduce cart abandonment rates, leading to increased revenue and customer loyalty.
Another advantage of integrating with local alternative payment methods is that they are often cheaper to process than credit cards, allowing you to lower the cost per order and improve margins. In fact, we have seen that enabling and processing payments through alternative payment methods can reduce payment processing costs by up to 10%.
It is no secret that most customers prefer local APMs when making payments. For example, if a customer lives in the United States, they may prefer a payment method that is common in the U.S., such as PayPal or Venmo. Similarly, a customer in China will favor a local APM such as WeChat Pay or AliPay.
Offering multiple APMs is very important for digital platforms who want to reduce cart abandonment, increase conversions and improve customer satisfaction.
If you're interested in integrating with local APMs as a checkout option for your platform, or have any questions, please don't hesitate to contact us. We'd be delighted to have an open and informative discussion with you about this topic.