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Will alternative payments dominate the online landscape?

CHANGES: Online payments

EVER SINCE PayPal first tested out the waters of alternative payment solutions and challenged the dominance of credit and debit cards, alternative payments methods have been steadily growing.

More and more companies are constantly popping up that are happy to provide us with the latest cutting-edge software platform with regard to processing payments. Could it be that we are heading towards an era where alternative payment methods will finally become the norm?

Searching for convenience

Alternative payment methods were born out of our need for convenience and efficiency. While credit and debit cards are fine for dealing with most online financial transactions, they can be a hassle to manage at times. By using a centralised account to process digital payments across several platforms, users stand to gain in terms of speed, ease of access, as well as the security safeguards that providers put in place.

PayPal was the first major brand to tap into that market, and it still holds the lion’s share in the industry: it holds a 65% market share and is embraced by over 16 million merchants around the globe, with junior contender Stripe coming in second at a 19% market share. Many more providers have launched their services in the last decade or so, including Square, Amazon Pay, Braintreem and Skrill.

The multi-currency issue

As the digital world keeps expanding and brings people from the four corners of the world onto the same websites, there is another reason why alternative payment methods are becoming more and more popular: different currencies.

Using a payments processing platform is a quick and easy way to cut through the noise and operate across several currencies, with competitive fees and processing speed that usually beats major card issuers and banks. This is particularly evident in the early adopter markets, like gaming. The gaming community traditionally brings together players from all over the globe, so online gaming providers were among the first to offer alternative payment options to account for varying locations – and currencies.

Even free spins casinos which offer no deposit bonuses, allowing gamers to play without first having to make a payment, pride themselves in offering a wide array of alternative payment options for their regular clients. Providing users with choice is one of the features that can help online businesses attract and retain clients.

Will alternative payments dominate the market?

It is estimated that by the end of 2019, 55% of all online transactions will be carried out through alternative payment methods. Up till now, although online shopping rates are high – 96% among Americans, 95% in Britain, and 93% across Germany – credit cards still remained the first choice among consumers.

As we become more and more accustomed to alternative payment solutions and comfortable with the security they offer, their use is projected to boost. Countries like India and China are expected to take the lead, where no-cash transactions are set to reach 45% and 65% respectively until the end of 2020.

Relatively unknown in western countries, platforms like Alipay and WeChat Pay are a huge hit in the Chinese market – and we could see their influence spill over to other countries over time.

With more and more companies embracing online purchases, from e-commerce to grocery shopping, it seems that our need for a variety of online payment methods will only increase – which will further fuel growth among alternative payment providers.

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