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The 5 Most Popular Alternative Payment Methods

Popular types of alternative payment methods

Alternative Payment Methods, or simply Alternative Payments, are payment options that don’t require a traditional payment device, such as a credit card. The term most often applies to online payments but can be used for brick and mortar payments as well.

Many alternative payment options are now gaining ground on credit cards, becoming more popular every year. Here are five of the most popular alternative payment methods today:

An e-wallet, or digital wallet, is a secure place to store funds for payments and money transfers. E-wallets are particularly helpful for industries that have difficulty obtaining credit card processing or businesses that need to both send and receive online payments.

E-wallet payments recently surpassed debit cards in 2017 as the second most popular payment option. They have their sights set on credit card payments next; the 2017 Global Payments Report by Worldpay states that e-wallets will overtake credit cards in the United States within five years and will account for 45.9% of the payments market by 2021.

One benefit of e-wallets is that they can be funded in many different ways: by bank account, credit card, prepaid card and more, depending on the platform. Several of these funding options are instant, so customers can load it beforehand, or wait until they’re ready to make a payment or send money to another account.

The biggest advantage that e-wallets have over credit cards is that they can provide a fast and streamlined checkout experience. All payment information is stored within the e-wallet, so in most cases a consumer simply has to authorize the purchase to complete the checkout. There’s no need to fill out long credit card forms.

Examples: Payza, PayPal, Alipay.

Mobile payments

This alternative payments method turns your phone into a payment device. Mobile payments can vary slightly by device and region, but all forms require a phone or mobile device.

Statista reports that the worldwide mobile payment revenue in 2015 was 450 billion USD and is expected to surpass 1 trillion USD in 2019; the global mobile payment revenue is increasing rapidly. In the US, mobile payments continue to gain popularity. The 2017 Global Mobile Consumer Survey: US Edition by Deloitte states that 29% of consumers surveyed had made an in-store mobile payment. There has also been a 50% increase in consumers who now use mobile payments on a weekly basis.

Mobile payments are also catching on in Europe: there was a record breaking increase of 200% from 2015 to 2016 of people making mobile payments. According to Statista, the transaction value of mobile payments in Sweden is expected to grow by a rate of 66.4% annually over the next five years, from $1,100m in 2017 to $8,425m (USD) in 2021.

There are different ways to pay using mobile money, either in the real-world or online. For some payments, you can simply “tap” your phone to the payment reader, for others you would use an online portal. Some mobile money systems don’t even require a smartphone at all, but allow you to send money through a feature phone.

Analog mobile payment systems are popular in developing countries because they bypass the need for bank accounts, credit cards, and smartphones. In developed regions with high internet and smartphone penetration, mobile money is more commonly sent online. In both cases, this payment method tends to be best suited for domestic transfers and are not as convenient for international transactions.

Examples: M-Pesa (Kenya), bKash (Bangladesh), Swish (Sweden), Venmo (USA), Apple Pay, Android Pay.

Alternative Card Payments

While many card payments are made by credit card, there are other types of cards that can be used as well for online and real-world purchases: debit cards, prepaid cards, and charge cards. These card types help to limit overspending by either using existing funds or not allowing you to carry debt from month to month.

This table offers a quick summary of the differences between credit cards and alternative cards:

  Credit cards Debit cards Prepaid cards Charge cards
Safer than cash x x x x
Linked to a bank account x
Pre-funded x x
Billed for later payment x x
No spending limit x

Debit cards can be swiped at retailers or used online to purchase goods and services, like a credit card. However, with direct debit cards the money is drawn from your bank account right away when you make a purchase.

Prepaid cards are pay-as-you-go cards, because you load them with cash when buying them and top them up when they run out. The prepaid card company keeps a record of your card and will be able to block and replace it if it’s lost or stolen, making this a safe payment method.

When using a charge card, you must pay the bill in full every month by the due date, which can help control spending. For your purchases to be approved, your spending and payment history is taken into account, as well as your financial resources and credit record. Charge cards can be used to build a credit history without risking getting into expensive debt, as long as you pay the full balance each month.

Examples of prepaid cards: Paysafecard, Vanilla Card.

Examples of charge cards: American Express, Diners Club International.

Cryptocurrencies

Cryptocurrencies, also called digital money, are secure digital records that cannot be forged, duplicated, or altered. In most cases, transactions that have been completed and confirmed by the network are irreversible, making this payment option very attractive for merchants who are worried about credit card chargebacks.

Cryptocurrencies were conceived to be decentralized digital cash systems. This means that no central body such as governments or banks have control over them and they are resistant to censorship. Bitcoin was the first cryptocurrency, but there are now hundreds of other alternatives: Altcoins. Luckily, many of these cryptocurrencies can be described in four words or less.

Cryptocurrencies are generally linked to a Blockchain, which acts as a ledger that records all movement of the digital currency. The ledger is publicly accessible and is verified by multiple independent members of the community. The cryptocurrency is thereby decentralized and no single entity has full control over the coin.

This graphic from Blockgeeks explains how a basic blockchain works:

Blockchain - how it works

Cryptocurrencies are still very new; Bitcoin is less than 10 years old, so merchants are understandably skeptical about adopting it. However, early movers such as overstock.com and Expedia were able to attract new customers and garner media attention by adopting cryptocurrency payment options.

Examples: Bitcoin, Ethereum, Ripple, Litecoin.

Bank account payments

Bank account payments let you send money directly from bank account to bank account. This can be an attractive option for merchants as bank payments in general have a lower cost for payment acceptance than credit cards.

There are two ways to accept bank account payments: customers either make payments directly to your bank account or they can use an online banking system to complete the payment.

There are three types of bank account payment methods, each one has their own advantages and drawbacks.

Bank transfers are forecast to become the second most popular payment method globally by 2021, according to the 2017 Global Payments Report by Worldpay. This option has low fees, making it a favorite among merchants and consumers. iDeal (Netherlands) and Giropay (Germany) are examples of online banking systems for bank transfers.

Bank wires transfer money via either a bank or non-bank provider, such as Western Union. The bank requests for the transaction to be completed by transmitting a message via a secure system (such as SWIFT) to the receiving bank. This option is extremely secure but usually has high fees, making it a better choice for large payments.

With direct debits, funds aren’t transferred right away. Instead you authorize the merchant to collect the money from your account at a set time, then the money is deducted from your account automatically. This is a simple and handy way to pay monthly and recurring bills as you only need to authorize the payment once. SEPA Direct Debit (Europe-wide) and ACH Debit (USA) are examples of online banking systems for direct debit.

  Bank Transfers Bank Wire Direct Debit
Secure x x x
Instant/fast x x
Low fees x x
Domestic x x x
Global x
Manual direct payments x x
Automated payments x
Good for subscriptions x


Alternative payments offer many benefits for both merchants and consumers. By understanding your customers and their payment needs, you can offer the right alternatives that will help take your business to the next level. To get started with alternative payment methods, be sure to sign up for your free Payza personal or business account today!

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