PSP Angels

VIKTORIA SOLTESZ

Founder of PSP Angels

Alternative Payment Methods: What are your Options?

One of the most important decision for online businesses is how to collect payments from their clients. To understand the risks, costs and benefits, the companies first need to evaluate the available payment method options which they have. Its especially important when a company is a startup or when established businesses expand to new markets.

Emergence of APMs

Over time, all the traditional payment methods have been deemed to be problematic in their own ways: traditional banking is time consuming and inefficient, especially in international transfers, cash is less favored by governments due to the risk of money laundering and tax avoidance.

Fast forward to today, though traditional banking, card and cash are still utilized, we are also seeing the emergence of different payment methods with an aim to make the payment experience more seamless for both consumers and for merchants. This is when automatic payment processing, such as card schemes, comes into the picture.

The use of card schemes, such as Visa and MasterCard, have rapidly grown and is one of the most popular payment methods out there. This is because card schemes facilitate transactions by acting as the middlemen between consumers and the banks. Not only do they help with payment processing, but since they play a big role in the payments sphere, they impose many rules and regulations to make sure all parties are in compliance with regulations and to ensure there are no fraudulent transactions. They also safeguard the transactions, to make sure that money is handled in the safest way.

This resulted to the mass adoption of cards payments which are still one of the most popular payment methods. But card payments are very expensive and still not very popular in emerging markets such as LATAM, Asia and Africa.

So we all know the traditional payment methods: cash, cards and bank wires. But what are the Alternative Payment Methods (APMs) and how one can choose the right ones.

What Other APMs Out There

Although card schemes are prevalent, the road does not end at that. When selecting APMs, businesses should consider other factors such as their business models and the cultures of their target jurisdictions, where a wider selection of APMs must be taken into account such as:

Wallets. This is a type of APM where clients can top up the wallet as a way of storing money and can initiate transaction from. This APM is ideal for businesses like brokerages as they can pay their clients by simply adding the money to their wallets. This makes the transactions much faster, with both accepting payments and initiating refunds.

Open Banking. Open banking technology allows users to make payments by giving instructions for a bank to make a transaction to another bank, without using a card. This way of making payments is much easier and safer as it removes the need to type long card or IBAN numbers.

Local Payment Methods. This is an option which varies across countries, and we always advise our clients to carefully assess the payment methods each target country uses as that is what the local people are used to and would expect to pay merchants with. For example, in Brazil, Boleto, a cash-based payment method is used by most locals. In Thailand, on the other hand, QR codes are very popular. In many African countries, mobile payments are more common as card payments are not used that much.

Conducting thorough research is critical when it comes to choosing the right APM for your business. This is what will allow your clients to have a smooth payment experience with you and save you a lot of money in the long run. If you need further assistance in this matter we are more than happy to assist you at PSP Angels. For a free consultation, you can reach out to us at info@pspangels.com.