Yes, if you’re in charge of handling payments for an online business, you should already be offering your customers the ability to pay in whichever way they want at the checkout. This isn’t news, you know this already - and a recent EY survey found that 73% of merchants recognize the potential loss in sales from not adopting alternative payment methods (APMs).
The world of payment methods is filled with opportunities for merchants, however, despite the allure, the hard truth is that the perfect APM is a myth.
The best approach is not one-size-fits-all but one that aligns with the specific needs of your business, customers, and market.
This article takes you through the nuances of APMs and underscores the need for a strategic approach to meet customer demands and cut down on traditional payment costs.
Welcome to the increasingly instant, cashless, and cardless future of transactions.
Alternative payment methods are easily defined as any option to pay that doesn’t rely on cash, or inserting your debit or credit card number in an online checkout. And consumers, increasingly, don’t want to pay by card, choosing APMs instead for a variety of reasons.
Research by Pymnts Intelligence shows that two-thirds of consumers chose to make an online purchase at a specific merchant instead of another because their preferred APM was available, and demographic trends gathered by ACI Worldwide reveal that 60% of Gen Z, 58% of Millennials, 41% of Gen X, and 19% of Boomers seek out APMs at checkout.
With more than 80% of merchants saying they plan to adopt more APMs within the next one to three years, it’s clear that the more offered at checkout leads to fewer abandoned transactions and increased conversion rates.
How do you know which payment method your customers want to see?
This week NASA, together with many pizzerias and bakery stores, celebrated the mathematical constant π, for the 35th annual Pi Day on March, 14th (3.14). And just as the digits of Pi stretch infinitely, the variety of APMs available to merchants seems boundless.
To avoid getting lost in this maze of options and going round in circles, merchants need to focus on three key considerations: the type of payment method, its geographical relevance, and the industry-specific needs they cater to.
- Type of Payment Method: There's a variety of options including digital wallets (think Apple Pay, Google Pay, and PayPal that virtually store your cash or cards), bank transfers (ACH, SEPA), Account-to-Account (A2A) transfers, Buy-Now, Pay-Later (BNPL) models, and cryptocurrencies.
- Geographical Relevance: Local preferences play a crucial role. PIX is a hit in Brazil, UPI is widely used in India, PayPal leads in Europe, Alipay in China, and Venmo (owned by PayPal) is preferred in the USA.
- Industry-Specific Requirements: Sectoral needs impact APM preferences, with Skrill and AstroPay popular in iGaming for example, and various digital wallets serving the retail trading sector. Understanding these requirements is key to optimal service and efficiency.
Universal alternative payment methods
So, just like the title of this article states, there is no universal ‘perfect’ solution, and success lies in each merchant’s ability to understand and cater to their specific market and customer needs. This is as much true as it is for online merchants as it is for point-of-sale (POS) merchants too.
“The future is digital, even for face-to-face payments.”
- Accenture, Payments Get Personal Report
For businesses looking to expand the number of geo-relevant and industry-specific APMs they offer to boost customer satisfaction, trust, conversion and sales, get in touch with Praxis Tech, a payment orchestration platform that is already connected with 540+ global PSPs and supports over 1,000 Alternative Payment Methods and 200 currencies.
