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Alternate Payments & the Ecosystem

According to a WorldPay report, cards which accounted for over half (57%) of internet payments in 2012, will fall to 41% by 2017. Alternative Payments would rule the online payment markets with a 59% growth.

Usually, alternative payments are everyday payment methods and can be divided into local and global methods. Local alternative payments address the respective domestic economy and have been installed for e-commerce. They are operated by local banks and processed in local currencies, have their own unique application and settlement following country regulations. Global alternative payments primarily compete with credit cards and address consumers who have concerns depositing their credit card data online with the global payments framework.


About half of all Americans carry just $20 in cash with them on a daily basis, and about 80% of Americans carry less than $50 daily. This means if you don’t accept credit cards, you could be missing out on sales.


The most common alternative payment methods are debit cards, direct debit, bank transfer, phone and mobile payments, charge cards, prepaid cards, cash payments, checks and money orders. Every category contains a variety of flavors. Direct debit within Europe mainly used in Germany, Austria and UK has been developed to the new SEPA standard by the European Union.


It’s no longer a surprise that alternative payments have become the lifeblood of any business. Whereas a couple of years ago, industry analysts did not foresee an optimistic future for the wide adoption of these payment types. Nowadays, consumer confidence in alternatives has never been more evident and gratifying. The question is which alternative payment methods to select on the consumer side or on the merchant side, as opposed to whether we are using them correctly to get the maximum benefit out of them. Alternate payments not only provide a channel for payments and transactions but also opens door to endless possibilities such as merchants and cardholder insights, data monetization and a whole lot analytical perspectives.


Some of the key alternative payments include peer-to-peer (P2P) payments, e-Wallets, mobile payments, prepaid cards, vouchers, bank debits and credits or linked bank accounts and cryptocurrencies.


The rise in online and mobile shopping in a secure environment has created a necessity for a variety of alternative payment options. In order for merchants to increase online consumer traffic, they need to be aware of the many alternative payment options available and understand which alternative payment types will add value to their online store and which their Customers prefer. By offering an alternative method of payment, a merchant can gain acceptance and exposure to new markets and new consumers.


Impact on Traditional Payments


Wider acceptance of nontraditional payment rails has already lead many non-bank financial providers to leverage these alternative payments schemes and develop further innovative products and services.  


In order to compete with these non-bank financial institutions, banks can start providing products and services around these payment rails to capture the customer base of these institutions.  Also since crypto currencies cannot be regulated by a central authority and mobile money also has its regulatory challenges in cross border transactions, banks can collaborate with traditional payment network providers and develop innovative payment protocols and systems to gain a competitive edge on secure, faster, global, cost-effective, unbanked payments.


A successful business has to be ready to align to digital payments in the upcoming years on the rails of Mobile in Store Payments, e-Wallets & Mobile Payment Applications, Social media payment options. 

The Bigger Picture Worldwide


Europe represents the third largest e-commerce market in the world, with a B2C e-commerce turnover of £326 bn. Card payments have long dominated online transactions both domestically and when selling cross-border. It is no longer enough to have just Visa, Mastercard and Paypal on your checkout. The use of alternative payments has grown at around 35% on average over the past few years. With more than 300 alternative payment methods in operation around the world the right fit and the right choice is the game changer.


China, the U.S. and the U.K. will likely continue leading the charge in adopting new payment technology, but the growing fragmentation in global e-commerce will soon change the way consumers pay for online purchases. In North America and Europe, payment-specific companies such as PayPal are competing for market share with major technology companies such as Apple and Google, as well as hundreds of other offerings from smaller payment providers.


Mobile wallet adoption is picking up speed. In fact, mobile is already a close second payment method for many e-commerce superpowers, and is the most popular payment method in China, with 56 percent of market share. The Global Payments Report predicts mobile wallets are set to grow in market share by 7 percent, overtaking both credit and debit cards in the U.S. by 2020.


Some alternate payments to lookout for


EMV and NFC Credit Card Processing


Alternative payments methods are made possible with credit card machines that offer EMV and near field communication (NFC) technology for secure payment solutions. It malesit possible for you to accept various payment forms such as EMV chip cards, contactless and mobile payments. Benefits of becoming EMV compliant will also reduce your risk and potential liability of credit card fraud.


Apple Pay, Samsung Pay and Android Pay


Samsung Pay payment transactions use both NFC and magnetic secure transmission (MST) technology which allows the phone to emulate a traditional card with a magnetic stripe. That means you don’t need an NFC-capable terminal,


Android Pay is the successor to Google Wallet, Google’s contactless payment solution/mobile wallet (launched in 2011) and works on any Android smartphone running the KitKat OS (Android 4.4) or higher. It’s NFC-powered, with support for debit and credit cards as well as loyalty/rewards programs. An in-app payments feature is set to launch later.




It is a very secure, quick and cheap way to make or receive payments online directly through your checking account. With free transactions bellow $10 and only 25 cents for any amount above it is definitely one of the most cost-effective platforms, although it does require both parties to have a Dwolla account.




China UnionPay China UnionPay is now the world’s largest bank-card settlement organization, according to a recent Nilson Report showing UnionPay had, for the first time, exceeded Visa in terms of global transaction volume, in the first quarter of 2015.  It has grown rapidly internationally in recent years, fueled by Chinese consumers increasingly travelling and studying abroad, and is now accepted in 150 countries and territories. Plus, 65 institutions in 17 overseas countries and regions have issued more than 10 million UnionPay cards locally. In Australia, Australia Post issues Load&Go China travel cards.




Alipay is a third-party online payment platform that was launched in China in 2004 by the Alibaba Group. It has more than 350 million registered users and facilitates around 8.5 million transactions every day. Alipay is a particularly good way for international merchants to gain access to the fast-growing Chinese online market, because it allows online merchants to receive payments from Chinese buyers in RMB and it is also strong on mobile, which is the preferred platform for millions of Chinese consumers. Recently, Alipay launched a charm offensive for US-based retailers and has already attracted the likes of Macy’s and Saks Fifth Avenue.




PayPal PayPal is one of the most widely known online payment solutions in the world and allows consumers to pay online using their PayPal account balances, bank accounts or credit cards. There are 152 million active PayPal accounts in 100 currencies across 203 markets, processing 9.3 million payments daily.






It is undoubtedly the world’s most well-known virtual currency, which means it is a payment system that is created and held electronically. Essentially, unlike physical currencies, Bitcoin is decentralized and is not linked to any banks. Instead, Bitcoin is created digitally by a community, which anyone can join. This community “mines” bitcoins using a digital distributed network.


Escrow payments


Escrow payments link payment with the delivery of goods. This helps to give customers more confidence when buying online, as their payment is only processed once they receive a delivery from the merchant.

Escrow payments Escrow payments link payment with the delivery of goods. This helps to give customers more confidence when buying online, as their payment is only processed once they receive a delivery from the merchant. An example is Australia Post’s PostPay, which ensures that payment is only released when a parcel is delivered and signed for.




A worldwide leader in payment services, 2Checkout maximizes online sales conversions by giving global buyers localized payment options. Trusted by over 50,000 merchants, 2Checkout supports transactions in 196 countries through 8 payment methods, 26 currencies, and 15 languages, forming one of the leading processors of online transactions in the world.




Technology is changing the way we think about payments and how we handle money in general, everything from mobile wallets that replace credit cards to decentralized digital currency. There are alternative payment methods to appeal to every market segment, and options to appeal to every sort of business. It’s just a matter of finding what the right fit to revolutionize the business is. 






Comments: (2)

A Finextra member
A Finextra member 13 March, 2018, 13:10Be the first to give this comment the thumbs up 0 likes

Alternative payment methods have become an imperative for online businesses growth. Payment gateway providers, processors and merchants need to work closely together to ensure they can address customer needs and expectations, but also deliver an optimal shopping experience, irrespective of the channel.

As the global ecommerce landscape gets more and more complex, consumer preferences also vary by demographic, country, shopping behavior and the product or service they would like to buy. However, one constant remains the same: the alternative payment methods offer is key for checkout conversion. 2Checkout, Stripe, G2A PAY, Authorize.Net are only some of the key players active on the market whose aim is to create a localized checkout experience for a global community of consumers.


Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 March, 2018, 16:34Be the first to give this comment the thumbs up 0 likes

When I was running the retail payments business in a previous life in 2007-8, there was a huge buzz around alternative payments. In the following 4-5 years, many alternative payments came and went / fizzled out / fell back on credit card rails e.g. carrier billing, mobile wallets, Dwolla, Tempo Decoupled Debit cards, etc. While deferred credit products like BillMeLater, Klarna and Affirm have made some headway, credit card and its rails have remained the most dominant form of online payments. 

Re. your opening line " will fall to 41% by 2017." ICYMI, it's already March 2018.

Avik Nandi

Avik Nandi

Payments Consultant

Wipro Ltd.

Member since

11 Jul 2017



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