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Alternative Payment Methods: An Introduction

Alternative Payment Methods

Alternative Payment Methods, or simply Alternative Payments, are payment options that don’t include traditional credit cards, especially for online purchases. There is a growing list of alternative payment methods, each with its own unique application. Most of these are either connected to a specific country or region, or have been designed to facilitate online transactions.

It’s not easy to find a single definition for alternative payments, but most experts agree that any payment method where you aren’t required to enter your credit card number at check-out would qualify as an alternative payment. An alternative payments system would therefore be any payment system that doesn’t require any credit card association for a transaction.

Alternative payment methods can increase a merchant’s global reach, provide customers with more choices, help to simplify checkout from both desktop and mobile devices, and potentially save merchants money by lowering processing fees and fraud risks. Whether you’re an online shopping enthusiast or manage an e-commerce business, it’s a good idea to familiarize yourself with the wide range of alternative payment options available to you.

Some of the most common alternative payment methods are:

  • E-wallets
  • Mobile payments
  • Bank transfers
  • Cryptocurrencies
  • Prepaid cards
  • Direct debit

By offering some or all of these alternative payment methods, your business will stand out by meeting the various customer demands and individual preferred means of payment.


Alternative payment methods present benefits for both merchants and consumers:

Benefits for Merchants

Online shoppers worldwide have diverse payment method preferences, so it’s necessary for merchants to offer a range of payment options, which will in turn attract more customers.

Alternative payment methods are valuable for merchants as:

  • They can enter markets with low credit card coverage.
  • They can accept more than credit cards.
  • They get a lower risk of returns & avoid loss of sales due to credit card declines.
  • It presents a real-time online payment acceptance.
  • It’s a trusted buying process.
  • It increases sales, both domestic and international.
  • It presents a real-time online payment acceptance.
  • They can provide payment options familiar to the consumer.

Avoid Loss of Sale Due to Credit Card Declines

When credit card payments are declined, there’s not a lot that business owners can do if that’s the only payment method that they accept. One of the most important measures of success for a merchant is the conversion rate: your revenues get higher the more your customers complete the checkout. Credit card declines can impact this as customers whose credit card gets declined may be discouraged to complete the checkout.

Credit card declines are a big problem, for the merchant, the consumer, and the credit card issuer. In 2014, a survey revealed that 17% of consumers interviewed had experienced a credit card decline in the United States, and this number is only increasing.

According to the Baymard Institute, credit card declines kill 2-5% of all potential sales. 90-95% of transactions are accepted on the first try, leaving 5-10% of consumers to try to complete their transaction a second or a third time before it’s approved. Typically, half of these transactions will then succeed, which still leaves 2-5% of e-commerce sales lost due to credit card declines.

To avoid a loss of sale due to credit card declines, merchants need to consider offering an alternative to card payments. By offering alternative payment methods, merchants give their customers greater flexibility which can be an excellent motivator in a purchase.

Increase Sales & Engagement

Alternative payments have been shown to drive traffic and increase sales, as well as “reduce shopping cart abandonment, support customer acquisition and help marketers overcome other key challenges.Research from Blackhawk Network in 2017 has revealed that alternative payment methods can:

  • Increase the likelihood of customer purchases and recommendations: 77% of the surveyed consumers would likely recommend a retailer that offers an alternative payment method, and 78% also believe that alternative payment options makes it more likely for them to make a purchase.
  • Foster loyalty: 67% of the respondents believe that using an alternative payment method keeps them loyal to the brand or retailer.
  • Drive shopper traffic and affinity: 37% of the respondents are more likely to visit a website or store that accepts alternative payment forms.
  • Prevent cart abandonment online: 11% of the respondents said that a mobile payment option would motivate them to complete an online purchase.

This means that merchants are not simply adding value and convenience for their existing customers by offering alternative payment methods, but these options will also help them attract new customers while generating greater loyalty and engagement from existing customers. Alternative payments can for that reason be seen as a great engagement tool for merchants.

Providing many payment options would also increase a business’ conversion rates, as it’s more likely that a customer will complete a purchase and come back in the future if there are more payment options to choose from. This is not something new: in 2009, research showed that 50% of surveyed British adult online shoppers said they would not complete a purchase if their preferred payment method was not available. The same survey showed that 40% of these shoppers would be more comfortable purchasing from an online business that offers many different payment methods. So merchants who want to make shopping at their store simpler and more attractive can actually increase profits by offering alternative payment methods.

Increase Cross-border Sales

Many countries have populations that want goods from outside their borders (“growing internet penetration and young populations accelerate this trend”), and “banks and traditional payments take time to get established in these new markets.” Alternative payment methods that can accept payments from across boundaries provide easier e-commerce worldwide for a business that is not limited by geography. So an online business can gain popularity in a country and connect to its consumers if it can offer payment options that are familiar to the consumers.

Reduce Chargebacks

Alternative payment methods would also reduce the risk of chargebacks as many alternative payment methods do not allow for chargebacks (the forced return of funds to their original source). This means that merchants can feel more secure when they accept a Bitcoin or money order payment over a credit card payment for example, since they know that the payment cannot be refunded without their permission. If you want to reduce your chargebacks, you should consider alternative payment methods.


It’s not just merchants who benefit from alternative payments, there are big benefits for online shoppers as well.

Benefits for Consumers

Today, it’s important that consumers feel that they have a choice when doing a payment, so that they are not “forced” to pay in a single way (for example by credit card). When doing an online purchase, it is much more convenient for a consumer if they can choose a payment method that they are familiar and comfortable with, which is why alternative payment methods would also be beneficial for consumers.

Alternative payment methods are attractive to consumers because:

  • They offer locally preferred payment methods.
  • They provide language and currency localisation.
  • They are recognized as trusted payment methods.
  • No credit or debit card is needed.
  • They are convenient, reliable, simple and secure.
  • They get access to more products and services.
  • They help simplify the shopping experience.

Local & Trusted Payment Systems

While alternative payment methods are not always country specific, it is important to recognize that there are different preferred payment methods for populations in different countries. Specific local payment systems are very attractive to the consumers, as they can use the payment system that works best in their country and this facilitates their online transactions.

Payment methods that offer instructions in a consumer’s own language and uses local currency will also put consumer at ease and make them feel more comfortable when completing checkout. This will help lower abandonment rates and increase customer satisfaction, giving you a big advantage over the competition. 

Added Security

As a shopper, it is generally safer and more secure to use an alternative payment method than a credit card for online payments. Online fraud is a major concern but alternative payment options tend to have a much lower fraud risk than credit cards. Customers that are concerned about online security and would prefer not using a credit card can opt instead for a reliable alternative like an e-wallet or cryptocurrency, which would be a safer and more secure option.

Save Time

Most alternative payment methods don’t require consumers to fill in as many online forms as a credit card purchase requires. This simplifies the online shopping experience and allows users to make their purchases faster. With an e-wallet, customers only have to enter their email address, and their billing and shipping information would be pulled from their e-wallet account. Customers will come to appreciate the rapid checkout experience, which could translate into more repeat business for your e-commerce website.


The popularity of alternative payment methods is growing, so as a merchant you might want to look into which alternative payment method(s) would work best for your online business.

With the Payza e-wallet, you can send and receive money online instantly, using credit and debit cards, bank transfers, bank wires, cryptocurrencies and so much more. Sign up for your free personal or business account today and discover all the alternative payment options offered by Payza!

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