In case you have any doubt, this year will mark a big shift in how consumers and businesses handle money. Quite possibly one of the biggest we have seen yet.
Alternative payment solutions are rapidly gaining ground, drastically changing how we think about financial transactions, how payments are made, and the entire money movement process, from onboarding to risk management and payment security.
What exactly are alternative payment methods? Simply put, it is anything that bypasses the need for physical cash or cards and offers; let’s call it a nontraditional way to manage and spend money.
The main reasons for this shift is largely in part due to:
➡️Adoption of Digital Wallets
➡️The Value of Payment Data
➡️The Need For Transaction Visibility
➡️Advanced Bank Account Payment Technology
➡️Heightened Awareness Around Payment Security
➡️A Strong Demand For A Faster Onboarding Process
➡️The Complexities Surrounding Money Movement In Today’s World
Here, we delve into the 30 types of alternative payment methods you can expect to take shape across the B2B landscape in 2024 and beyond.
Electronic Funds Transfer or Bank Account Payments (including ACH): This is the direct money transfer between accounts that bypass intermediaries known as EFT and ACH bank payments; these payment solutions are recognized to be the most cost-effective.
Open Banking Payments: Direct bank-to-bank payments that leverage open banking APIs, allowing third-party providers to initiate payments directly from a consumer's bank account.
Interac e-Transfer®: Popular in Canada, this is a way to send money directly between bank accounts using an email address or mobile phone number, known for its simplicity and security.
Instant Payments: Real-time payment systems such as FedNow® and RTP® process transactions almost instantly, 24/7, unlike traditional banking system payment rails that can take up to five days.
e-Wallet Payments: Digital wallets store payment information and passwords for numerous payment methods and websites, enabling quicker and more secure transaction
eChecks: An electronic version of paper cheques used to make payments online. They use the ACH network for transferring funds from the payer's checking account to the payee's account.
Recurring Bank Transfers: Automated scheduled transfers from a bank account, commonly used for regular payments like rent, subscription payments, or utilities.
Payment Links: Sending a link via email, SMS, or social media that directs the recipient to a payment portal, useful for businesses without a dedicated e-commerce platform.
Tokenization: Enhancing security in digital payments by replacing sensitive payment data with unique identification symbols, retaining all the essential information without compromising security.
Biometric Payments: Payments are authenticated using biometric identifiers like fingerprints or facial recognition, enhancing security and convenience.
Subscription-Based Payments: Regular, automated payments for ongoing services or products, like streaming services, software, or gym memberships.
Buy Now Pay Later (BNPL): Allows consumers to purchase goods immediately and pay for them over time, often interest-free. This is increasingly popular in online retail.
Mobile Phone Payments: Payments made using mobile devices, often through apps or mobile wallets, utilizing technologies like NFC (Near Field Communication) for contactless payments.
Unified Commerce Payment Solutions: Platforms that integrate multiple payment methods and channels (online, in-store, mobile, etc.) into a single, seamless experience.
Cross-Border Digital Payments: Digital platforms facilitating international transactions, simplifying the process of dealing with different currencies and regulations.
Contactless Payments: Transactions completed by tapping a contactless-enabled card or mobile device near a point-of-sale terminal with NFC technology.
Voice-Activated Payments: Transactions initiated and authenticated using voice commands, often through virtual assistants like Amazon Alexa or Google Assistant.
QR Code Payments: Payments are made by scanning a QR code with a smartphone, linking directly to a payment portal or app.
Cryptocurrency: Digital or virtual currencies using cryptography for security, the most famous being Bitcoin. They operate on decentralized networks based on blockchain technology.
Blockchain-Based Payments: Utilizing blockchain technology for secure, transparent, and tamper-proof record-keeping of transactions.
Digital Currencies Issued by Central Banks (CBDCs): Digital forms of fiat money issued and regulated by a country's central bank, aimed at providing a digital alternative to traditional banknotes.
Social Media Integrated Payments: Payment functionalities integrated within social media platforms, enabling users to make purchases or send money without leaving the platform.
Smart Contract Payments: Automated payment systems on blockchain platforms, where transactions are executed automatically when predefined contract terms are met.
Wearable Device Payments: Using smartwatches or fitness bands for contactless payments, similar to mobile payments but with the added convenience of wearables.
In-App Purchases: Direct payments within mobile applications, particularly common in gaming, social media, and other service-based apps.
Digital ID-Based Payments: Payments that are authenticated using a digital ID, potentially linked to a national identity system or a digital passport.
Internet of Things (IoT) Payments: Enabling connected devices like smart refrigerators or cars to make purchases on behalf of the user, such as ordering groceries or paying for fuel.
Virtual Reality (VR) and Augmented Reality (AR) Payments: Transactions made within virtual or augmented reality environments are likely to grow with the expansion of VR/AR technologies.
