Alternative Payment 101

Many people who operate an online business often ask; what are alternative payments and do I need them? The simple answer to that question is alternative payments (for the sake of this article) will be defined as additional payment methods aside from the commonly accepted form of payment. For e-commerce this can be defined as payment methods other than credit/debit cards and for point of sale we can define this as other than cash. And yes, whether you operate your business on or offline, offering additional payment options to your customers is beneficial to your business.

Let’s look at this concept from a perspective that all of us should know well; the grocery store. After arriving at the grocery store and piling your cart full of items you do (and don’t) need you head to the checkout stand. What are your options to pay for the groceries you’re about to purchase? Most commonly you’re able to use cash, a physical check, and credit or debit card. At the customers convenience they pay with the method which best suits them.


This is the core aspect of alternative payment options; allowing the customer to pay with an option of their choice.


Why do I need Alternative Payment Methods?


By using alternative payments whether you’re a point of sale merchant or an e-Commerce merchant you’re increasing your chance of capturing a potential client. Not everyone has credit/debit cards, there are people who refuse to carry around cash, and there are numerous people who don’t have bank accounts. By limiting your customer’s ability to pay you, you’re limiting your ability to earn, with a little work and some attention to your customers you’ll be able to successfully expand your business opportunity.


E-commerce merchants experience this in a much more profound way as there is no face to face interaction between merchant and consumer. Additionally with the prevalence of online security concerns and scams, consumers are ever more cautious with providing valuable payment information. By allowing your users to pay with alternative methods you’re able to capture potentially lost sales.


Tip: Offering alternative payments not only provides you opportunity to capture new users but also to re-capture users who have had their primary payment method declined. Example: User X submits a transaction with his credit card and the transaction is declined. Try directing him to use one of the alternative payment options you have available that is not card based, such as ACH. This gives your customer the opportunity for pay you without having to think much more about it.


Here are some of the more commonly used alternative payment methods within the US. These are not only widely used but also well trusted and a more streamlined integration process.


Common Alternative Payment Methods:

  • PayPal
  • ACH/Check 21
  • Google Checkout
  • Bill Me Later
  • Pre-Paid Cards


Alternative payments become much more important when you’re operating in international markets. Take a look at this quick presentation by Ian Wynne, Co-Founder of Merchant University on “Introduction to Global Payments”.


101 Education


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