Once a concept goes mainstream, it transforms from fad to norm. This is the case with alternative payment methods (APMs), a phenomenon that is rapidly merging into the conventional world of e-commerce.
Industry data predicts that by 2019, 55% of all online transactions will be made using APMs. This growth is driven by the fact that consumers are drawn to online shopping experiences that let them dictate payment choice. As APMs become more commonplace around the world, the online payment method ecosystem will continue to develop.
If you’re an online merchant or someone in charge of boosting sales, you’re probably thinking: am I keeping up with consumer demands?
It’s a valid question, but let’s take a step back. Before we talk about why consumers are going gaga for APMs, let’s talk about what they actually are.
What are Alternative Payment Methods?
Alternative payment methods are a little like the concept of alternative music genres. Eventually, the artists that get widespread attention creep into the mainstream scene. The same goes for online payment methods. An innovative concept is introduced to market, and it has two outcomes: it either garners national attention or flops. The ones that stand out in the crowd stick.
The concept of an alternative payment method is as intuitive as it sounds. An APM is an alternative way of paying that doesn’t rely on traditional payments like a credit card or an immediate exchange of funds.
Instead of being tied to one specific payment model, e-comm platforms can integrate more flexible options for shoppers. There are a few different types of alternative payment methods.
First, there are APMs that involve bank transfers. This is when an online purchase is made, and the shopper approves the funds using an online banking method. This method is gaining ground according to the WorldPay Global Payment Report and as online banking continues to grow, this method is likely to see more traction.
Another common APM is a digital wallet-based solution. This is where a consumer pays for an item using a mobile device. Typically this is done using a mobile app that allows a shopper to link a credit card to the app to authorize purchases. Mobile is quickly expanding beyond traditional credit and paving the way for more alternative payment methods that include financing.
Instant financing itself has increased in popularity due to the flexibility in payment terms. With the added perks of being fast and convenient, instant financing is quickly joining the ranks of mainstream payments. Unlike a traditional credit application, there are less details required from the consumer to process their application. On mobile this is clutch. This can be done easily on desktop or mobile and allows shoppers to pay for purchases over time. Instead of being constrained to strict terms, shoppers can choose to pay in a timeframe that works best for them.
In the fashion space, consumers are longing for the tangible dressing room experience but still want the ease and convenience of buying online. The try before you buy method makes it so there’s no need to compromise – shoppers can order their sweaters or swimsuits or shoes, sometimes as many as they want, try them on in the comfort of their own home, decide what to keep, and then pay for those items. This shopping experience makes so much sense, it’s kind of a wonder that it isn’t already the norm.