2023’s Alternative payment revolution: how to embrace new methods and drive sales
The global e-commerce sector is expanding at a rapid pace, and the pandemic has further accelerated its growth. Every day, people around the world use the Internet to make online purchases, not just within their own country but also overseas. Studies reveal that in 2022, the total worldwide turnover of the e-commerce market reached $5,542 billion, nearly double that of 2018, and this trend is projected to persist. To capture a substantial portion of this market, your business must align with modern trends, and integrating alternative payment methods can assist you in doing so.
What are Alternative Payment Methods?
Alternative Payment Methods (APMs) are any forms of payment that do not operate within the worldwide network of card systems such as Visa and Mastercard, nor do they involve cash. This encompasses payment options such as online banking transfers, digital wallets, QR codes, and even cryptocurrencies.
Relevance of Alternative Payment Methods
The worldwide economy is progressively transitioning towards a cashless payment system. Capgemini predicts that the e-commerce industry and the demand for alternative payment methods will continue to rise. While debit and credit cards remain the most prevalent online payment options, APMs are gaining traction and gradually replacing conventional solutions. Currently, payments made through bank cards constitute approximately 41% of all e-commerce transactions, but by 2026, their share is anticipated to decline to 33%.
Why is this happening? Simplicity and speed in the payment process are highly valued by customers, which explains why e-wallets, QR codes, mobile apps, prepaid cards, and other APMs are gaining popularity. The trend is also driven by the fact that a growing number of consumers are opting to use mobile devices for online shopping, as opposed to computers or laptops, as was previously the case.
Types of alternative payment methods
The vast number of alternative payment methods is extensive, however, the primary categories of APMs include:
1. E-wallet based payment options
This bank payment type has become increasingly demanded. Various electronic wallets such as PayPal, AliPay, and ApplePay fall under this category. With this modern tool, individuals can operate without concerns regarding time and location. Transactions can be safely executed at any time, and funds can be received almost instantly.
2. Bank, non-cash, or credit transfers
The transfer of funds from an individual’s, or legal entity’s account to another account is accomplished via online banking, where the transaction is verified.
3. Prepaid cards
These are cards that enable a holder to make purchases up to a predetermined limit. They do not require a separate bank account and are issued without reference to the name of the holder. Prior to using a prepaid card, it must first be loaded with funds to enable payment, and the amount spent cannot exceed the available balance on the card.
Prepaid cards that are offered by popular brands such as Visa and Mastercard.
Prepaid cards that operate on a similar principle but function independently of card systems.
4. Buy Now, Pay Later (BNPL)
A payment method that permits consumers to pay for their purchases in multiple installments, usually ranging from 3 to 4 payments. This payment solution enables customers to acquire goods and distribute their costs over several months without incurring any interest or hidden fees, and sometimes it is even possible to delay the initial payment. This results in enhanced purchasing power and freedom for individuals to acquire desired items at their convenience, ultimately leading to the boost of sales.
5. Cryptocurrency Solutions
The use of cryptocurrency as the means of payment is gaining significant traction each year. To facilitate payment acceptance in cryptocurrency, several options are available, such as transferring to a crypto wallet address, paying through a QR code, creating a custom payment module, and connecting to crypto processing.
Why is it crucial to carefully consider payment solution options?
The payment industry is currently undergoing significant changes, and customer behavior is evolving along with it. Mobile payments are becoming increasingly popular, and customers prioritize speedy and convenient payment methods among those available. As a result, it is essential to carefully consider payment options.
According to the Baymard Institute’s study, the online shopping industry experiences an average cart abandonment rate of approximately 79%. Although the majority of this rate, 58%, is attributed to those who were simply browsing the website without the intention to purchase, other reasons for cart abandonment should not be overlooked. For instance, 9% of non-purchasers reported not finding a convenient payment method, while 4% stated that their bank card was declined. Additionally, 17% of those surveyed found the payment process too lengthy, leading them to discontinue their purchase and seek alternative stores.
That is why businesses need to adopt innovative solutions in order to enhance customer loyalty and add value to their brand. By offering the most popular and user-friendly payment option, companies can significantly boost their conversion rates. However, it is important to note that these payment types should be tailored to your target audience and their geographic location. It’s essential to analyze your target market, its preferences, and requirements to determine which payment methods to prioritize, instead of simply integrating as many options as possible.
However, it’s not enough to just select the payment means based on the target audience’s needs. Each payment solution should be thoroughly tested for security, convenience, cost, and complexity of integration before implementation. After integrating the selected payment methods, it’s essential to monitor and analyze their effectiveness to ensure they meet the company’s needs and goals.
Providing appropriate payment options to customers may appear insignificant, but statistics reveal that offering the right methods leads to higher conversion rates, maximizes advertising expenses, and enhances the overall profitability of a business.
Get in touch with UniversePAY right away by filling out the form below or sending an email to firstname.lastname@example.org, and we will be more than happy to assist you in integrating the suitable payment solutions for your company.