Alternative payment methods are becoming more and more popular, but what exactly are they? These are ways to pay for something other than cash or major international credit card brands. These types of payments can come in handy for people who don’t have a bank account or other common payment methods to buy something. This article will go through all types of alternative payment methods and why you might want to use them.
What Are Alternative Payment Methods?
Alternative payment methods are any payments that don’t involve traditional banking accounts or credit card use. A lot of alternative payment methods rely on some kind of mobile apps such as Apple Pay or Google Pay. Domestic cards, direct debit, cash-based vouchers – all these payment types are known as alternative payment methods. To accept online payment for the business, you can use a fintech company service, which provides a one-stop payment processing solution to make online purchases.
Types Of Alternative Payment Methods
There are most popular alternative payment methods like domestic cards, realtime transfers, and cash-based payments. You can find the most popular types and their definition below.
Cash-Based Payments (Electronic Cash Or E-Cash)
This is a type of payment that can use in addition to the traditional payment method. While the online payment process, customers choose a cash-based method and the system generates a barcode or unique number code to identify the payment. After that, the buyer should show this identification to the store and pay with cash. When payment is confirmed, goods or services deliver to the customer.
Realtime Bank Transfers
Realtime bank transfers are a way to pay for something by sending money instantly. This is different from a credit card because real-time payments do not involve a merchant, service provider, or other third parties. Instead, the money is sent directly from the payer’s bank account to the payee’s bank account.
Direct Debit
Direct debit is one kind of alternative payment method that involves paying for something using your direct debit mandate. Usually, when you place an order with any online store, you have to enter your bank information and other details so they can charge you later on through direct debit. Such payments are usually used for recurring payments.
Domestic Card Schemes
Domestic card schemes are probably the most popular alternative payment solutions in inner markets. This method works like the global card operators like Mastercard or Visa but is accepted only in a few markets. The main advantage for customers is lower transactional and processing fees.
Electronic Wallets
Electronic wallets are digital wallet accounts that allow users to pay for things and services with the click of a button. Consumers load their funds to electronic wallets with different ways like cash, cards, bank transfers, etc. Then, using this payment method, customers can make online or offline payments, person-to-person and other transactions or send e-money.
Mobile Wallets
A mobile wallet is a piece of software like an e-wallet, that stores customers’ money, loads it in different ways. Then, using a mobile wallet, people can pay online and offline, pay bills, and buy goods or services, using their smartphone or other mobile devices.
Pass-Through Wallets
Pass-through wallets are different than electronic wallets in that they hold your money as a holder of funds. This software generates tokenized card numbers for each transaction. Such wallets can be used for making purchases online or offline by scanning a QR code or entering the number manually using your phone keypad. Most popular e-wallets include Apple Pay and Google Pay.
Buy-Now-Pay-Later (BNPL)
This payment method is usually used for online purchases that allow customers to defer paying for goods or services until a later date. This type of payment is available in many countries and is mostly funded with a bank account or credit card.
Why Do Alternative Payment Methods Need To Be Considered In Your Payment Strategy?
Alternative payment options are becoming more and more popular than ever before because they provide flexibility to people who do not have a bank account or don’t have an opportunity to use traditional payment methods. The most important reason alternative payment methods should be part of your payment strategy is that they can be an effective way to reduce fraud compared to mainstream payment methods like credit cards.
In addition, these methods help customers to use something familiar to them during online shopping. Overall, these reasons can increase eCommerce conversion and sales.
The Bottom Line
New technology is constantly changing our lives. This includes the way we do things like make payments. Alternative payment methods are becoming more and more popular because of their convenience, low merchant fees, and ease of use. Alternative payment methods are useful for both customers and merchants and should be considered in any merchant’s payment strategy. With all this in mind, it is important to consider using alternative payment methods in your business so you can stay ahead of the curve and ahead of your competitors.
