Six benefits of alternative payment methods for small businesses

This content was provided by MultiPay.  

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Did you know that by 2024, alternative payment methods are projected to account for over half of all global e-commerce transactions? With the increasing popularity of digital payments and e-commerce, small business owners cannot afford to overlook alternative payment methods.

Businesses that offer multiple payment options have been shown to experience a 30% increase in sales. In this article, we'll dive into the advantages of alternative payment methods and why your small business should consider implementing them. 

What are alternative payment methods?

Alternative payment methods refer to any payment method that is not a traditional credit or debit card transaction. These can include digital wallets, cryptocurrency, buy now pay later (BNPL) services, bank transfers, mobile payments, and more, which we will discuss in detail later in this article.

What are the advantages of alternative payment methods?

1. Enhanced security

The first major benefit of alternative payment methods is increased security. Transactions made through digital payment methods are often encrypted and use advanced fraud detection measures, making them more secure than traditional payment methods. A recent survey by the National Retail Federation showed that 63% of consumers believe digital payments are more secure than cash or credit cards.

2. Convenience and flexibility

With alternative payment methods, users can make transactions from anywhere, at any time, and on any device. This convenience can help to improve the customer experience, as customers can quickly and easily make purchases without the need to visit a physical store or use a specific payment method. According to a survey by PYMNTS, 43% of consumers say they are more likely to shop at a store that accepts mobile payments.

3. Increased customer satisfaction

By offering alternative payment methods, you can provide your customers with more choices and flexibility. This can improve their overall experience and lead to higher customer satisfaction. According to a survey by Paysafe, 59% of consumers say they are more likely to return to a store that offers a variety of payment options.

4. Improved cash flow

BNPL services can help you to get paid faster by allowing customers to make payments over time. This can improve your cash flow and reduce the risk of late payments. A recent study by Accenture found that BNPL services can increase customer spending by up to 20%.

5. Reduced transaction costs

Some alternative payment methods, such as cryptocurrency, can reduce transaction costs by eliminating intermediaries and reducing fees. This can be especially beneficial for small businesses that operate on tight margins. According to a survey by BitPay, 88% of businesses that accept cryptocurrency say they save money on transaction fees.

6. Competitive advantage

Offering alternative payment methods can set you apart from your competitors and attract more customers. It can also position your business as innovative and forward-thinking. According to a survey by Paysafe, 60% of businesses say that offering alternative payment methods gives them a competitive edge.

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Which alternative payment type should my business adopt?

Digital wallets

Digital wallets can be used to offer customers a more seamless checkout experience, allowing them to store payment information securely and complete transactions quickly. Digital wallets can also help businesses to reduce the risk of fraudulent transactions and chargebacks, as transactions are often more secure than traditional payment methods.

Cryptocurrency

While still relatively new, cryptocurrency offers several advantages over traditional payment methods. For example, it can be used to make international transactions more affordable and faster, as it eliminates the need for intermediaries and reduces transaction fees. Additionally, accepting cryptocurrency can help businesses to attract new customers who prefer to use this payment method.

Bank to bank transfers

Also known as electronic fund transfers (EFTs), this allows customers to transfer funds directly from their bank account to the merchant's account, bypassing the need for credit or debit card transactions. One major advantage of EFTs is that they are often more cost-effective than traditional payment methods. Banks typically charge lower transaction fees for EFTs than for credit or debit card transactions, which can be particularly beneficial for businesses operating on tight profit margins.

Buy now, pay later (BNPL) 

THIS CAN can help you to increase sales by allowing customers to make purchases without worrying about the upfront cost. BNPL services allow customers to pay for their purchases in instalments over time, making it easier for them to manage their finances while still making the purchases they want.

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Alternative payment methods offer several benefits that can help small businesses to improve the customer experience, reduce the risk of payment-related issues, and increase sales.By offering alternative payment methods like digital wallets, cryptocurrency, and BNPL services, you can stay ahead of the curve and attract more customers.

It is important to note that not all alternative payment methods will be suitable for every business. When deciding which alternative payment methods to adopt, you should consider factors such as your target market, transaction volume, and existing payment infrastructure. Additionally, you should ensure that you are complying with all relevant regulations when accepting alternative payment methods. For example, businesses accepting cryptocurrency should be aware of the tax implications and regulatory requirements surrounding these transactions.

From enhanced security and increased customer satisfaction to improved cash flow and reduced transaction costs, alternative payment methods can help businesses stay competitive in the rapidly evolving e-commerce landscape.

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