What are Alternative Payment Methods?

In the post-pandemic age, eCommerce has become the mainstream way to shop, leading to increased use of digital payment methods. For this reason, companies trying to offer a seamless checkout experience have revised their payment strategy by providing local payment methods such as e-wallets, Buy Now Pay Later (BNPL), local card schemes, direct debit, and prepaid cards.

For example, according to McKinsey’s 2022 Digital Payments Consumer Survey, nearly nine in ten Americans are now using some form of digital payments, and they are engaging with these rapidly evolving solutions in an increasing variety of ways. It is estimated that digital payments penetration increased to 89% in 2022, with a markup from 18% to 30% of consumers intending to use three or more digital wallets during the 2021-2022 period.

Examples of alternative payment models Mobile payments (Apple Pay, Google Pay, Xoom) are another form of APMs made through a mobile device with a preferred payment app to pay online, by QR code or SMS.

Buy Now, Pay Later (BNPL) is a short-term loan that consumers take for purchases and then pay overtime. These payments are usually made at the point of sale, but they can also be processed using online checkout pages.

Loyalty programs are a form of payment that has become more and more prominent for restaurants which have payment applications for mobile devices, where a restaurant offers bonus points according to how many points the patron has received for each dollar spent.

Cryptocurrency is an example of an alternative payment method where an electronic currency (bitcoin) incorporated with cryptographic technology is used to ensure that the payment runs safely and securely.

Frequent flyer programs imply the cardholder uses points accumulated from other purchases using the card, as a substitute for a credit card payment.