The Increasing need for alternative Payments

Alternative payments, also known as Other
payment methods refer to payment methods that are used as an alternative to
cash payments, but over the years, credit cards have been added to that list.
So alternative payments refer to payment methods aside from the use of cash and
credit cards. Most means of alternative payments has been developed either for
electronic commerce or to address a domestic economy.





cards



The increasing number of alternative payments
has grown exponentially in the last few years due to increased security, for
fear of credit card usage online. Several other billing solutions have been
brought forward for web-based merchants and other merchants as well, to be able
to accept alternative payments online and also to have access to distant
markets.





Currently, alternative payment options are
used throughout Europe, North America, and Asia, and have a penetration level
of over 62% in various countries.





The most common alternative payment methods are money orders, Prepaid cards, charge cards, direct debit, bank transfers, digital wallets, checks, debit cards, phone and mobile payments such as sms payments e.t.c. I will be giving a brief insight into each of these payment methods below.





Charge cards



A charge card is an alternative payment method
issued to people, and it provides for direct debiting payment method. i.e., it
allows for the cardholder to make purchases that are paid by the card issuer.
The holder becomes indebted to the card issuer and generally has a deadline to
repay the money at the due date often at the end of the month.





The difference between a charge card and a
credit card is that charge cards are issued without spending limits, unlike
credit cards that have credit limits. Also, the company that issued the charge
card does not collect interest on it at the end of each month, their source of
revenue is via the merchant fee on transactions, unlike credit card companies
that charge interest.





Prepaid cards



This form of alternative payment method
provides payment through a monetary value held on the actual card or a kind of
deposit into it. Prepaid cards are most times issued in the name of the
individual account holder.





Direct debit or Direct withdrawal



A direct debit or direct withdrawal is also
another increasing used means of alternative payment. It is a financial
transaction in which one person, business, or company withdraws funds from
another person’s bank account.





The payee ( the person who draws the funds)
instructs his or her bank to collect, extract or debit an amount directly from
the payer’s bank account. Before this kind of transaction can take place, the
payer must have advised his bank that he or she has authorized the debit before
his or her bank can allow the payee’s bank to draw the funds.





Bank transfer



A bank transfer sometimes called a wire transfer is a method of payment that involves transferring money from one entity ( person or institution) to another. A bank or wire transfer is often the most effective method for transferring funds between bank accounts. Online bank transfers are popular alternative payment methods in Europe.





Online banking ePayments



This form of payment is designed and
orchestrated basically for use with online commerce. With this type of payment,
during the online check out procedure, the merchant or business owner redirects
the consumer to their financial institution’s online banking site where they
will log in and authorize the transaction.





Mobile Payments



Mobile payment is a new means of payment that
is rapidly improving and spreading as an alternative means of payment,
especially in Asia and Europe. A consumer can pay for a variety of goods and
services without the use of cash, check, or credit cards.  The charges are added to their phone bill.





Digital wallet



Under this category, we have google wallet,
Dwolla, and Paypal. Paypal currently has over 139 million active registered
accounts with over 35million U.S customers. Paypal is available in close to 135
markets and 28 currencies, making it one of the leading alternative payment
options.





Payment technologies are moving faster in this
dispensation than at any other Era, thus an exciting improvement for merchants
looking to tap into the global market. Alternative payment methods are valuable
to both merchants and consumers. we will dive into some of its benefits below





Value of Alternative Payment methods to the Merchant



1.
lower risk of chargebacks





Chargebacks are credit card payments that are
reversed back into the consumer’s account. But with alternate means of payment,
such risks are reduced to a minimal level.





2.
Payment options familiar to the consumer





Some consumers have a preference when paying
for specific products or services, so when you have a variety of payment
options, it is most likely they will find the one familiar to them.





3. A
Trusted buying process and Increased sales:





A merchant who provides trusted payment
methods to interested buyers is adding trust and a sense of ease through the
buying process. This will translate to increased sales.





other benefits include; real-time online
payment acceptance, options other than credit cards





Value of alternative payment methods to the consumers



1. Trusted payment methods like Paypal, Dwolla
e.t.c





2. No credit or debit card needed





3. Convenient, simple, reliable and secure





4. Simplified shopping experience





5. Access to more products and services





In conclusion, Alternative payment methods are
both beneficial to merchants, consumers, and even the Economy of the nation
because it facilitates a smoother flow of cash.


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Published on July 11, 2019 04:31
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