The changing face of the payment landscape: Alternative Payment Methods

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Despite online sales growing globally year-on-year, the COVID-19 pandemic has seen the shift from bricks and mortar stores to digital go into hyperdrive.

While lockdowns, enforced shop closures and long queues outside supermarkets started the ball rolling, concerns around second waves and mask-wearing have done nothing to slow it down.

One startling statistic from Adobe’s May 2020 Digital Economy Index that tracks the state of ecommerce, put things firmly into perspective: shoppers in the US spent more online during the early COVID-19 months of April and May than in November and December 2019 – the country’s holiday season.

Consumers spent $142.5 billion online during these peak shopping months last year. This was easily eclipsed by the $153 billion spent this April and May – a rise of seven percent – with some $52billion more spent during these months than expected.

The ecommerce explosion has seen many businesses investing in their digital operations. This has brought the payment landscape sharply into the spotlight.

Pre-pandemic Alternative Payment Methods (APMs) were making huge inroads as consumers looked for flexible ways to pay for products, such as splitting or deferring payments.

Now, with bigger numbers turning to online shopping – and a clamour for more expensive goods such as bikes, gym equipment and electrical items due to consumers spending more time in and around their house – retailers should look to incorporate more APMs into their business model.

Here, Redbox takes a look at the rise of APMs and the changing face of payment.

What are Alternative Payment Methods (APMs)?

The gym has been closed due to the pandemic and you’re missing your spinning classes. You look online for a spin bike, find the one you like and click to put it into the shopping basket. At the last minute you get cold feet, worried that the £500 will leave you short for the rest of the month. We’ve all been in similar positions. But what if there was a way of splitting this payment across two months at point of sale without a long-winded credit check?

APMs, defined as non-card payment methods, were expected to comprise of nearly 55 percent of global ecommerce payments last year. Worldpay estimated digital and mobile wallet payments accounted for 41.8 percent of ecommerce transactions around the world in 2019, with credit cards just 24.2 percent and debit cards 10.6 percent.

Gone are the days when credit card, debit card and PayPal options are considered sufficient payment options for your customers.

There are now hundreds of APMs across the world to consider, including digital wallets, cash-on-delivery, bank transfers and ‘buy now pay later’ financing.

While the growing use of mobile transactions is a key driver in the APMs trend, so too are the Millennial and Gen Z shoppers who are less likely to own a credit card, are at ease with mobile phone shopping and happier to use flexible financing options. Where card payments are used by these groups, they are also often hidden behind a wallet or app, with the convenience of consumers not having to type out their bank details for each purchase, key.

Exploring the different payment methods available can open up whole new customer bases for merchants and lead to a fall in shopping cart abandonment and higher conversion rates.

Does your business need them?

The key to a successful online business is finding the right balance to maximise conversions and sales.

Not every payment method will work for your business. Ask yourself these questions to help narrow down which ones you may want to incorporate into your site:

  • Who are your customers? Are they male or female? How old are they? Where do they live? What are their interests?
  • How do your customers interact with your site? What proportion use desktop, mobile, or interact through social feeds?
  • What payment options are they using? Don’t only think about the payment options customers are using on your site now. Research other brands in your industry and similar industries. What payment methods are their customers using? Has your technology partner or agency noticed any new trends emerging?
  • Do you want to appeal to a wider audience? Do you want to remain an exclusive brand, or do you want your products to be available to all? Millennial and Gen Z shoppers for instance, have been quick to embrace instalment payment methods or financing options, allowing them to purchase more expensive products without needing to be on the same financial footing as older generations. These short financial contracts can also encourage brand loyalty long term.
  • Do you want alternative payment options to be part of your marketing plan? Type in ‘buy a bike’ into the UK google search bar this week and the first result is from bicycle and motoring giant Halfords – with a marketing slogan ‘Bicycles at Halfords – Flexible Finance from £99,’ as the headline. Click through to its website and you are able to find out more about how you can ‘spread the cost’. With more people turning to cycling due to the pandemic, Halfords has teamed up with Redbox Digital partner Klarna to offer various financing options. More brands are following suit, giving customers flexibility in payment and allowing them to buy more expensive products – such as top-of-the-range cycles – than they might other-wise have opted for. Ensure visibility of these options on social feeds and ecommerce stores so customers are aware of them early, to help maximise conversion rates.
  • Do you need to adapt your APMs from region to region?
    What works in one region, may not work in the next. For a successful cross-border ecommerce operation, you must adapt accordingly to the local markets and customs. In the Middle East, for instance, digital retailers have unique payment challenges to overcome in the form of a heavy reliance of Cash of Delivery (COD), while digital and mobile wallet payments at 58.4 percent are almost treble that of the credit card in Asia at 20.1 percent, with debit cards now making up just 4.2 percent of ecommerce transactions.

When you have answered some of the above questions and discussed these with your technology partner, it is time to explore some of the options to incorporate into your digital platform.

Alternative Payment Methods to look out for

With so many APMs and companies under each umbrella vying for attention, it is difficult to know which ones might add value to your business.

Merchants must be prepared to continually analyse use and conversion rates of each to find the perfect balance for their business.

Having too many payment methods or the wrong APMs with a long-winded credit check, can have the opposite effect to what you hope to achieve.

Three to look out for:


Redbox’s partner Klarna gives customers a number of different financing options – and is taking the ecommerce world by storm.

Used by mega names such as Sephora, Asos, Adidas, H&M, and more than 200,000 businesses globally, brands using the Swedish company’s services have reported a 30 percent increase in conversions. You can also sell with Klarna everywhere you meet shoppers – from online, your native app, bricks and mortar store, and more.

Merchants are paid immediately on each transaction through Klarna, while customers can pay 14 or even 30 days later, giving them the flexibility that can make a huge difference to their purchasing power.

It also means consumers are no longer slaves to the pay packet and don’t have the hassle of waiting for money to be put back into their account when returning unwanted products.


One of the first ‘buy now, pay later’ providers in the Middle East, tabby allows customers to make a purchase online and pay back in monthly instalments, or 14 days after delivery – and check in without using a debit card.

A customer can be approved in seconds, through tabby’s risk assessment process, leaving the merchant to ship the order immediately. tabby pays the company when the goods are delivered and takes the money from the customer when the item reaches them by any number of usual methods.

The process gives merchants in the region new payment options for its customers while eliminating its own risks and logistical issues – something that could make a huge difference as countries start to move on from the COVID pandemic.

Abdul Samad Al Quashi (ASQ) – one of the biggest perfume retailers and OUD across the globe recently turned to Redbox for support in improving and configuring the plug-in for tabby. It is now being used on ASQ’s online stores in the UAE and Saudi Arabia with the hope it could provide the springboard for a change in online shopping habits across the region.


‘Buy now, pay later’ provider Splitit, gives shoppers the option to split payments for products into instalments – using their existing credit cards and without incurring interest charges, or paying fees.

Joining the Magento Technology Partner program in January this year, the Magento 2.0 Splitit extension has led to a 78 percent higher conversion rate for merchants, with no frustrating credit check for customers to contend with at check out.

It also allows merchants to promote products with the number of instalments pre-calculated, and lets shoppers set up payment plans with their credit card without any application or registration and giving them more control over their money.

In conclusion

Alternative Payment Methods are shaping the present and future payment landscape.

While merchants are continually looking to improve the customer experience, consumers are increasingly expecting to find different ways to pay for their goods online.

Merchants must be prepared to leave behind the one-size-fits-all approach to payment, with research on each country, industry and consumer-type crucial in deciding which APMs will work for your region and business.

Using financing as part of a marketing plan or retargeting strategy can help push conversions. Digital wallets give consumers faster check-out experiences. Instalment options mean customers have more control over their money and have more purchasing power. These are just a few of the options keeping brands on their toes.

Flexibility and convenience when paying are crucial to a happy and satisfied customer – and return business. Finding the right payment balance to keep conversions on an upward trajectory are key for a successful online business.

If you want to find out more about how Redbox can assist you in optimising your payment landscape, get in touch.