The Outlook for Alternative Payments

Alternative payment use is growing faster than credit and debit cards. ISVs must equip merchants to deliver the payment experiences their customers demand.

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Alternative payments give consumers payment options beyond paying with a credit or debit card, cash, or check. Notably, alternative payment methods are expected to grow faster through 2027 than traditional card payments. Alternative payments had modest adoption before 2020. However, the pandemic accelerated consumer demand for contactless and frictionless payments. As alternative payment transactions increased, so did the expectation that consumers would be able to use them wherever they shop.

At the same time consumer behaviors rapidly evolved, merchants’ needs also changed. Rising prices forced business owners to look for ways to control operating costs, including reducing payment processing fees. Merchants also recognized the importance of competing on experience and payments’ role in optimizing CX. Since the ability to use their preferred payment method is the top-ranked digital shopping feature among consumers, merchants are wise to provide a multitude of options to cast the widest net.

A survey conducted by Ernst & Young of large U.S. merchants revealed that 85 percent are planning to accept new alternative payment methods over the next one to three years. As an ISV or VAR, you have the opportunity to equip merchants with the payment options that will keep them competitive while at the same time driving growth for your business.

Why Consumers Choose Alternative Payments

While the pandemic may have accelerated adoption, alternative payment use continues because consumers have experienced first-hand how easily these methods align with their lifestyles, particularly how convenient it is to leverage their mobile devices to make payments.

Consumers crave quick, easy payments bundled with rewards. With alternative digital payments, mobile wallet providers can easily provide price drop notifications, targeted rewards, and other attractive benefits beyond major card brands’ typical rewards and flyer miles. Consumers also demand personalization, and providers can weave that desire right into a consumer’s digital wallets.

In addition, alternative payments can help consumers stretch their budgets with options like buy now, pay later (BNPL) to divide larger payments into equal, interest-free installments, allowing consumers access to high-cost items today without paying interest tomorrow.

Alternative Payment Methods Merchants Should Consider

The majority of merchants, 73 percent, agree that failing to accept alternative payments could negatively impact sales and revenue. Help your clients expand their payments capabilities with:

  • QR Code Payments
    The widespread adoption of smartphones and cameras that can natively read QR codes has skyrocketed and facilitates an easy way to make payments. Scanning a QR code can direct consumers to a payment page where they can complete transactions via mobile wallet or other method. By 2025, it’s projected that 30 percent of all smartphone users will use QR codes to make purchases.
  • Text-to-Pay
    Merchants can implement text-to-pay at the point of sale or as a stand-alone solution for collecting payments via phone or email invoicing. This alternative payment is ideal for service-based businesses like home maintenance, mobile technicians, salons and spas, and more. It allows merchants to send a payment request via SMS text message with a link to pay and give customers convenient options for completing the transaction.
  • Electronic Invoicing
    Similar to text-to-pay, electronic invoicing allows merchants to create an invoice they can send by text or email. This saves costs of paper invoicing, not to mention allowing merchants to be paid up to ten times faster. Another attractive option for merchants is that invoices can be created in accounting platforms like Quickbooks, and payments automatically post back to the platform, saving the merchant time and resources.
  • ACH
    Electronic, bank-to-bank money transfers, aka ACH payments, have increased by more than $1 trillion annually in the last decade. These alternative payments make it easy for consumers to make fast, secure payments, particularly for recurring billing or subscription services. Additionally, ACH processing fees are lower than credit and debit cards and paper check payment methods, making them an attractive choice for merchants.
  • Mobile Wallets
    While mobile wallets can be used to complete QR codes, text-to-pay, and other alternative payment transactions, they are also a popular method for in-store shopping. Near-field communication (NFC) allows merchants to accept mobile wallets like Apple Pay and Google Wallet at the in-store point of sale.

Give Your Clients Options

ISVs have the opportunity to take the role of trusted advisers and help merchants understand the types of payments their customers prefer based on data and demographics. This will allow you to build a total solution for merchants that enables them to accept the types of payments their customers expect and to increase customer satisfaction.

For more insights into alternative payments, who’s using them, and how to enable your clients to accept them, contact Datacap Systems.

Datacap Systems

Datacap’s industry-standard integrated payments solutions empower any Point of Sale, regardless of architecture, with the payments flexibility to accommodate any merchant. Via one simple interface, POS developers can keep pace with evolving trends and payment industry standards, so they can spend development dollars on POS innovation rather than payments.


Datacap’s industry-standard integrated payments solutions empower any Point of Sale, regardless of architecture, with the payments flexibility to accommodate any merchant. Via one simple interface, POS developers can keep pace with evolving trends and payment industry standards, so they can spend development dollars on POS innovation rather than payments.