New whitepaper explores alternative payment Solutions around the globe
April 26, 2023
A new white paper published by Fabrick and Axerve titled “Alternative payment solutions: how they are changing the payment scene” reveals how alternative payments are dominating the payment scene.
Alternative payments are more and more popular by the day; It is projected that by 2027, they will reach more than $15 trillion. With a compound annual growth rate (CAGR) of 16.3% over the period 2017- 2027.
But, what encompasses alternative methods?
(…) According to the paper, (alternative payments) refer to everything that falls outside of the traditional payment methods that have been used both for online and in-store purchases, specifically all the payment solutions alternative to the main credit/debit card networks, cash, and checks.
Alternative payments offer multiple benefits: heightened accessibility, convenience and low difficulty of use are some of the reasons. Some payment solutions, such as digital wallets, are able to provide merchants with “transparent” fee conditions, so that businesses are not hit with pesky hidden costs.
As well as it’s previously mentioned qualities, the popularity of these payment solutions were brought about by the ever increasing demand by expanding e-commerce markets. Merchants trying to keep up and traditional methods not being up to par, as well as the increasing demand for frictionless, secure payment methods add to it as well.
The white paper analyses the market use of different payment methods such a Buy Now, Pay Later, digital wallets, cryptocurrencies and and account-to-account (A2) transfers.
According to Axerve, digital wallets remain the most popular in 2023, with Buy Now, Pay Later and A2A tools following quick in its heels.
PayPal still holds the highest market share, accounting for 59% of the overall alternative payments. MyBank follows with 25%, and Sofort by Klarna accounts for 3% of the total collections with methods other than credit cards
Alternative payment methods are most popular in areas such as retail, grocery shopping and restaurants, and especially the Fashion sector, with Klarna dominating it by 54%.
Surveys show 2/3 of UK respondents think cashless methods are risky, but the statistics and tendencies tell a different story, as the country is “one of the most cashless in the world.” In 2021, barely 1/3 of the population made use of cash, and digital payment methods are expected to reach $440 billion in this year. Over 95% of the UK’s population has access to the internet and a bank account, and 65% own credit cards.
Moreover, card payments make up more than half of all payments (51%) and alternative payment methods make up 41%. Bank transfers make up 7%, while cash is only responsible for 1%.”
These numbers show the UK is rapidly moving towards becoming a cashless economy.
The methods that are most widely used and installed by merchants are Klarna, with 22% of total collections, followed by PayPal, which also holds the record for the most popular and used digital wallet. iDEAL and MyBank dominate the A2A sector, followed by Klarna and Sofort.
To quote Alessandro Bocca, CEO of Axerve, it is necessary for merchants to “adopt collection platforms capable of managing the wide array of solutions available”. This includes, he says, not only the payment solutions, but the underlying supply chain. “such as acquirers, fraud prevention, and integrated alternative payments.”
To succeed in this environment, merchants must be ready to act quickly and optimise their sales and minimise costs.
Merchants need to keep up with the rise of alternative payment methods if they want to remain relevant in the global market. These are just some of the most popular alternative methods, but surely a new Fintech will revolutionize the payments sector yet again, so partnering with companies that keep innovating and allow flexibility is imperative.
Want to learn more? Check out Payment Cards and Mobile’s full write-up here.
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