E-commerce sites continue to grow in popularity. That means customers are spending their money online in a variety of ways on a never-ending list of different products. In addition to conventional methods of payment such as bank transfers or debit/credit cards, consumers are also making use of a wide range of alternative payment methods.
Some alternative payment methods will require specialist equipment or software to accept, and depending on your customer demographic, it may be worth investing in some form of equipment financing to ensure that you have the means to take those payments.
What are the main alternative payment methods?
There was a time when every means of payment was considered ‘alternative.’ The first human to hand over a paper note in exchange for a product was using an alternative payment method! Of course, technology has transformed businesses in a massive number of ways, and receiving payments for goods or services that you provide in your e-commerce store means being able to accept those payments. Although there are numerous alternative payment methods, there are three that you should consider if you want to keep up to date with your customers. The ones that you need to look at closely are:
- E-wallets – PayPal is by far the most well-known, but other platforms like AliPay and Payza are growing their market share too.
- Mobile Wallets – When everyone has a smartphone in their pocket, it was only a matter of time before someone worked out a way of using them to buy directly. Apple and Android Pay are the most recognized brand of e-wallet, although Venmo in the US and Swish in Sweden are extending their brand reach too.
- Cryptocurrency – The youngster on the block, payments for cryptocurrencies like Bitcoin or Ethereum are becoming more mainstream. Just as slow-moving businesses failed to adapt to more common payment methods like credit cards, cryptocurrency is being adopted by those businesses looking at the potential benefits that the technology provides.
If your marketing strategy is working, then you are drawing an audience to your e-commerce store. Once they are there, you should be guiding them through your pages until you get them to the shopping cart and they click on the ‘Pay’ icon. Unfortunately, this is where many people will navigate away from your store.
If one of your customers wants to pay with their e-wallet and they can’t do that easily, then they are going to bounce away and find a store that will let them pay in the way that they want. That’s why assessing each alternative payment method is so vital.
E-wallets – Pros and Cons
This is by far one of the most popular alternative payment methods in the world. Almost everyone has at least one e-wallet that they use on a regular basis. PayPal is the most well-known and is a standard option when it comes to paying for something on an e-commerce store. For businesses, there are some pros and cons to offering this as a payment option, but with 87 million PayPal accounts around the world, the pros may well outweigh the cons.
- It is an easy platform to use, and setting up an account is fast and straightforward. There is no need for additional hardware, so you will not need to get business loans just to start using this payment method.
- Most people are familiar with PayPal and will trust the payment method.
- You don’t need a business account, and can even use your own personal PayPal account.
- PayPal (and other e-wallets) can provide you with invoices, making your finances easier to manage.
- Lower transaction fees than most credit cards or bank transfers.
- Standing Orders are easy to set up
- PayPal Credit means that consumers can have a cash advance on their purchases.
- Chargebacks come with a very high fee.
- Although there is Seller Protection on PayPal, this does not cover any digital goods.
- PayPal is able to suspend your account at any moment, and if that happens, you may have to wait a long time to access the money in your account.
- Some consumers will refuse to use PayPal due to negative experiences with them in the past.
- It has very little in the way of seller protection, and some scammers have found loopholes that will affect your ability to get back any lost products.
- PayPal’s customer service is notoriously difficult to contact.
Although there are potential negatives when using PayPal, the popularity of the platform and the sheer numbers of users makes this something of an essential when you’re looking at the right alternative payment options to choose for your e-commerce store.
Mobile Wallets – Pros and Cons
Mobile payments are becoming very popular indeed. Turning your phone into a payment device is incredibly convenient, with both Apple Pay and Android Pay growing fast. In both the real world and online, mobile wallets could be the next big thing when it comes to buying, so your e-commerce store should be aware of the benefits and risks of this payment type.
- Safer to use than having to carry hard cash on you at all times, which is good for both consumers and business owners.
- Security is high with m-wallets like Apple Pay offering higher levels of security than you’ll achieve through credit or debit cards.
- Convenient for both those making a payment and those receiving it.
- Many people are wary of handing over their sensitive financial details to a tech company like Apple or Google.
- Although the larger platforms are unlikely to fail, if you opt for a smaller m-wallet platform and the company folds, then you may lose access to your account and your money.
- If you do not have a phone that is capable of accepting m-wallet payments, then you may need to upgrade, although as a business expense, you may be able to buy this through equipment loans.
- Privacy issues are a concern for both consumers and the businesses.
Put simply, the pros of m-wallets far outweigh the potential cons. It seems clear that m-wallets are going to continue to grow. Make sure that your business makes an informed decision about whether you accept this payment option or not.
Cryptocurrency – Pros and Cons
Most people have heard of Bitcoin and the concept of cryptocurrency, but the majority of people don’t understand what it is or how it works. That’s the main issue with this type of payment option. However, there are many benefits. Have a look at the pros and cons of cryptocurrency payments to see if it’s something that you need to consider adopting.
- There are no transfer fees, reducing your overall running costs.
- Payments are instant, meaning that you won’t have to wait until payment appears in your account.
- Fraud is very difficult, meaning that your business is safer.
- You will be able to accept payments from anywhere in the world.
- Early consumer adopters of cryptocurrency are very loyal to the businesses that accommodate this payment option, and your sales figures can show that loyalty through higher profits.
- The value of Bitcoin and other crypto options fluctuates a lot, and you may lose money when converting your cryptocurrency into local money.
- It can take a lot of time and work to set up an account, although there are platforms that can manage this for you.
- There isn’t a huge demographic that is using cryptocurrency on a regular basis. While this payment method is slowly growing, there are concerns that this option has peaked in terms of popularity.
Merchants are always going to have to keep up with the changing demands of their customers. Make sure that you are offering the right choices of payment option in order to reduce your bounce rates and provide a more fluid service. Not every alternative payment method is going to suit your e-commerce business model, and you may have to invest in some form of equipment financing to have the right tech to accept payments.
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