The payments industry has been rapidly and drastically changing with the use of alternative payment methods (APMs) quickly becoming the norm.
As we have seen during the COVID-19 pandemic, contactless payment methods were reinforced in a matter of months, causing consumers to go digital and shop online.
“Statistics show that approximately 55% of global transactions are made via APMs.”
A Statista study shows that digital wallets are set to become the most popular APM by 2024. If merchants do not update their payment processing systems, they will be left behind and lose out on sales. Supporting alternative payment methods is a way to grow your sales and gain more customers.
Table of Contents
What is an APM?
An Alternative Payment Method (APM) is any form of payment for goods or services, which are not made with cash or check, or a major credit card.
Types of Alternative Payment Methods:
Merchants adopt alternative payment methods for several reasons. Before we list the benefits of accepting alternative payments, let’s look at some of the most popular APMs today.
1. Digital Wallets: Also known as an e-wallet, a digital financial account is accessible on your phone, computer, or smart device. It’s basically your credit cards in digital form. (E.g., Apple Pay, Google Pay, Samsung Pay.)
2. Mobile Payment Apps: Applications that allow you to make payments using your phone. These apps are linked to a bank account or credit card. (E.g., PayPal, Venmo, Zelle, Cash App, etc.)
3. (BNPL) Payment Installments: Buy now, pay later with an account linked to your credit card.
4. ACH: This payment method allows consumers to pay for goods and services online using direct online transfers from their bank account. (E.g., E-Check, iDEAL, Sofort, Divvy, etc.)
5. Direct Debit: Payment pulled directly from the customer’s bank account. It’s normally used for recurring payments.
6. Cryptocurrency: Digital and virtual currency that uses computer code (cryptography) and relies on blockchain technology. It’s decentralized; it doesn’t rely on banks. A volatile asset class (E.g., Bitcoin, Solana, XRP, Ethereum, Cordano, Dogecoin, etc.)
Benefits of APMs
Once, it was believed that the main benefit of APMs was anonymity. This was the main reason various groups of people used them.
Now, the benefits of APMs are not only limited to confidentiality. These payment methods are for every merchant seeking to grow their business by providing convenient and frictionless payment options for their customers, amongst many other benefits:
1. Provides Payment Options:
Users have the convenience of several payment options, which helps businesses stay competitive.
2. Improved Customer Experience:
Improved end-to-end customer experience, which results in more return customers. When a customer can’t pay because a credit card terminal is unavailable or experiencing performance issues, the merchant runs the risk of losing business. APMs help provide real-time feedback so you can quickly react to issues.
3. Increased Sales:
When you provide more convenient and easy payment options, it increases the number of sales.
4. Secure:
APMs are more secure than credit card transactions thanks to end-to-end encryption and tokenization. Biometric authentication, where users sign into their phone via fingerprints, face ID, or passcode reduces the chances of fraudulent cases.
5. Increased Trust:
Paying with a secure reliable payment method is much more comfortable than handing your credit card to someone.
6. Global:
You can accept cross-border payments and attract more customers globally.
7. Affordable:
Credit card users who used to pay extra to keep their cards active can use APMs without paying extra. So, it’s high time for merchants to allow alternative payment methods that have low usage costs.
8. Convenient:
Quick, easy, and no need to carry anything but your phone.
9. Sales Tools:
The more sophisticated APMs provide business analytics, which help in visualizing and understanding how they impact your sales.
10. Hygienic:
Contactless payments are the most hygienic method of payment.
** Related Read: How Payment Processing Can Help Grow Your Small Businesses**
The Future of APMs
Alternative Payment Methods will no longer be “alternative.” According to a review by Juniper Research, digital wallet spending is expected to reach ten trillion globally, by 2025. There are three factors driving the APM growth: demand, convenience, and innovative technology.
In many other countries, APMs are already the preferred method of online payment.
In the Netherlands, 60% of online purchases are made using online bank transfers. In Latin America, SafetyPay tops the list; while in China, Alipay and WeChat Pay are the most popular APMs. Mobile wallets outnumber bank accounts in sub-Saharan Africa.
Are APMs Right for Every Business?
Despite such a spike in popularity, businesses find it challenging to understand why APMs are worth it. The use of alternative payment methods (APMs) helps businesses improve productivity and operational efficiencies. However, it’s not a one-size-fits-all solution. Businesses need to make sure that the payment technology they are going to implement fits their needs. With so many options available for processing APMs, how do you decide which one is best for your business?
Many merchants struggle to select the right APMs and payment processing providers for their business. Not all payment processing providers are the same. In this fast-paced industry, it is important for merchants to contact a reliable payment processing provider such as GETTRX.
Conclusion
Demand, convenience, and innovative technology are driving the alternative payment methods rapid evolution. Undoubtedly, digital payments will eventually replace cash. The boom in mobile or net banking has laid the foundation for APM growth.
APMs are supposed to squeeze out payment giants, like MasterCard and VISA. In other words, APMs like GPay, ApplePay, and other APMs are more popular around the world.
In this fast-paced industry, it is important for merchants to be proactive and start offering alternative payment methods to future-proof their business.
Digital is dominating and merchants need to adapt with alternative payment methods. It is important to contact a dependable innovative payment processing provider, such as Global Electronic Technology, “GETTRX”.
Whether from a point-of-sale terminal or through our secure internet payment gateway, GETTRX has the solutions to prepare your business for accepting APMs.
