Kimberly Miller of Payway Shares Her Insights on Cards & Alternative Payments

The use of alternative methods of payments has increased rapidly in the past decade. Credit cards have become contactless, making for a quicker transaction. Most importantly, consumers are finding alternative payments convenient, which facilitates a better shopping experience.

Alternative Payments Are Gaining Ground

Contributing to the decline in credit card usage is the demand brought on by online shopping customers for alternative payment methods. With worldwide online sales growing from $1.34 trillion 2014 to $5.21 trillion in 2021, alternative payment options cannot be ignored. They’ve become a necessity. As a merchant, accepting only credit cards is no longer sufficient.

Payment methods are a critical part of any payment experience. When a customer doesn’t come across their preferred payment method during the payment process, that customer will most likely abandon the cart and move on to another merchant. Knowing this will impact sales, you must take time to assess your business’ current payment strategy and see how adding alternative payments will make a positive difference.

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Alternative Payment Methods: Outlined

What is an alternative payment? An alternative payment refers to any form of payment that isn’t cash or credit card. Here is a review of the most popular alternative payment methods, using data found in the Worldpay Payments Report:

Digital & Mobile Wallets

Digital and mobile wallets allow consumers to securely store payment credentials to pay for purchases virtually anywhere in which commerce takes place; either online, in-app, or in-store. Wallets can be funded directly via cash, cards, or bank transfer. They can also act as pass-through wallets that are linked to cards or bank accounts. Popular wallets include Apple Pay, Google Pay, and PayPal.

Digital wallets comprised 48.6% of eCommerce transaction value globally in 2021, or just over $2.6 trillion. Wallets are projected to rise to 52.5% of transaction value by 2025.

Buy Now, Pay Later

Buy now pay later (abbreviated to "BNPL") is a popular alternative payment method because it allows customers to either spread an item’s cost over several installments. They may also choose to pay the whole amount later, usually without having to pay interest or transaction fees.

BPNL currently represents 2% of global online purchases and is expected to grow to 5% by 2025. Worldpay analysts say that potential growth from generational shift cannot be underestimated.

ACH & Bank Transfers

Automated clearinghouse (ACH) and bank transfers allow consumers to pay merchants for purchases directly from their online bank account. Easy-to-use mobile payment applications have made ACH payments and bank transfers viable alternatives to cash and card-based payments.

Bank transfers accounted for an estimated 7.4% of global eCommerce transaction value that is projected to surpass $425 billion annually in 2022.

Direct Debit

Direct debit payments are commonly used for recurring payments. Consumers consent to giving a merchant the ability to pull funds directly from their bank account for an agreed service.

According to Worldpay, direct debit usage was 1% of eCommerce transaction value globally in 2021 and projected to have the same transaction value in 2025.

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Benefits of Alternative Payments

All these alternative payment methods go a long way in improving the checkout experience and are likely to contribute to increased merchant loyalty. They also provide many benefits to you, the merchant:

More Revenue: Frictionless payments increase sales. Alternative payment methods ensure checkout processes are fast and intuitive so customers are less likely to back out of the process midway through.
Potential Savings: Credit card fees, which have increased over the last 10 years, could be reduced by using alternative payment options. While it is still important to offer credit cards, doing so can impact profit margin. As alternative payment usage increases, profit margins will improve.
Customer Security & Peace of Mind: With greater encryption and tokenization, these payments are secure to use both online and in-store. In addition, biometric authentication required by mobile payments make alternative payments even more secure than chip and PIN transactions.

Now that you are aware of the types of alternative payments and their benefits, you are probably wondering how you can integrate them into your business – and how quickly. Thankfully, there is no need for you to juggle the implementing of each alternative payment method. By working with a payment processor that offers alternative payments, you can effectively expand your payment strategy while building a larger customer base.

This post was guest content provided to Chargebacks911® by Kimberly Miller, EVP of Strategy and Business Operations at Payway.

Kimberly Miller is a technology industry veteran with a not-quite mundane past and a storied future. As Executive Vice President of Strategy and Business Operations, Kim brings decades of experience in business development and digital transformation in the technology, software, and self-service solutions industries to Payway, a cloud-based software company.