Alternative payment methods
Alternative payment methods (APMs) are new means of paying for purchased goods or services. They’re alternatives to more conventional payment methods, such as cash or major credit cards. Some common examples of APMs include:
- Prepaid cards
- Bank transfers
- Digital wallets
- Loyalty programs
- Local cards
- Delayed payment and installment options
The pandemic has spurred consumers’ rapid adoption of alternative methods of payment. In the US, the use of cash has declined, and this trend is likely to continue, alongside the rise of contactless or digital payment options.
For example, it’s expected that by 2026, the use of digital wallets will grow by 53%, jumping from a total spend of $3.4 billion using digital wallets in 2022 to more than $5.2 trillion in 2026. The popularity of digital wallets, which is any software or hardware that enables users to make electronic payments, is mainly because of the convenience and security they offer.
Alternative payment methods are also becoming more popular around the world. Take Germany, for example. 57% of German consumers prefer to use PayPal for online shopping transactions. In 2019, a Consumer Payments Survey found that Australians are continuing to embrace alternative, mainly electronic, payment methods. The use of contactless card payments grew by 50% that same year.