What are Alternative Payment Methods?

Nov 26, 2024

4 minutes Read

What are alternative payment methods? Learn how mobile wallets, Alipay, WeChat and QR code scanning offer a fast and secure payment experience.

What are Alternative Payment Methods for Modern Transactions?

Alternative payments methods include any option that doesn’t involve cash, cheque, debit card or credit card.

You’d get a funny look if you say that outside of North America, because these alternative payments are anything but alternative. In China, Alipay has 1.3 billion users. In Europe, 300,000 people use PayPal on a daily basis. And a recent report predicts the value of digital wallet payments to grow 60% between 2022 and 2026.

Knowing What Alternative Payments are is Critical in Modern Retail.

This was covered in a previous article, but it’s worth reinforcing: Canada’s is experiencing its largest population boom since the 1950s, with 97.6% of it fueled by immigration. And in the US, immigration rates are the highest they’ve been in 20+ years.

As a retailer, your new neighbours (and potential new customers) are coming over with an expectation that they’ll be able to pay the way they’re used to.

And since 50% of customers consider ease of checkout when deciding where to shop, it’s safe to assume that new Canadians will seek out options with a degree of familiarity.

What are the Popular Alternative Payment Methods?

If you plan to still be in business ten years from now you’ll no doubt be accepting payment in all of these ways.

Digital Wallets

If you accept Apple Pay and/or Google Pay, then you accept digital wallets. But those are far from the only digital wallets out there. Alipay and PayPal, both referenced above, are digital wallets. WeChat Pay is another Chinese digital wallet that already has over 4 million users in the US. Africa’s MTN has over 70 million users. And Venmo is sweeping American millennials off their feet.

Cryptocurrency

Despite the headlines and crypto-bro memes, cryptocurrency has made the move from off-the-board investment to acceptance in major retailers like Starbucks, Home Depot, and Whole Foods.

BNPL (Buy now, Pay later)

This method grew quickly in recent years as economy tightened. Now, BNPL payment options like AfterPay, Klarna and Affirm are experiencing record growth. The value of BNPL transactions is expected to see compound annual growth rate of almost 22%, translating into a 750% increase in the value of BNPL purchases.

Close up of OTT Pay Smart Terminal scanning a mobile QR code for payment

Why are QR Codes so Popular in the Alternative Payment Universe?

QR codes have become a preferred point-of-purchase approach for many of the largest digital wallets and alternative payments because a simple scan can complete an entire transaction.

With unique QR codes for everything you sell, your customer can pick what they want and scan the code with their phones to pay directly from their account. Alternatively, as a digital wallet holder, they’d have their own QR code which you can scan to take money directly from their accounts.

And because the QR code is designed for a single purpose and externally activated, it’s one of the more secure ways to accept money.

Why Accept Alternative Payment Methods?

A previous piece about why to accept alternative payment methods referenced the fact that 85% of merchants plan to accept new alternative payment methods in the next three years. And they have more than a few good reasons to do so:

Attract more customers with familiar payment options, especially online.
Break into new markets through acceptance of preferred payment methods.
Save on fees. And depending on the method, save a lot on fees.
Open up strategic opportunities with other users.

But the best reason is to not lose a sale because your customer can’t find their preferred payment method. Over 50% of Canadian consumers would abandon a purchase for this reason. Plugging that hole is an easy fix.