Alternative Payment Solutions
Fueling e-commerce with convenience, security and innovation
As U.S. online transaction volume grows from $150 billion in 2007 to a
projected $355 billion in 2012, the online shopping population will change
attitudinally rather than demographically, according to a Javelin Strategy and
Research report. The report indicates that existing online shoppers with
convenience needs and security concerns will influence the evolution of
alternative payment methods. These systems will be built and tailored to those
with online shopping experience, rather than those unfamiliar with or new to
online shopping. The Javelin report also indicates that online alternative
payment methods such as PayPal and Bill Me Later — traditionally used by early
adopters — will become more mainstream as others temper their use of credit
cards and embrace these
new online methods.
Implemented correctly and with reasonable expectations, alternative payment solutions provide lower cost and a higher yield for those looking to get their feet wet with e-commerce. So what are these alternative payment opportunities? There are many, some of a very traditional nature and some that break the mold entirely.
ClickandBuy is one of the more interesting alternative payment systems on the Web. The German Internet-based payment and billing system is a market leader in Europe and is expanding its horizons to serve online merchants in the U.S. Much like competitor PayPal, consumers create a ClickandBuy account and fund it with money using a credit/debit card or from a checking account. A hosted payments platform, ClickandBuy includes an active fraud server, live customer care and multicurrency capabilities that could help U.S. merchants expand their operations overseas. More than 7,000 merchants utilize the service in 26 countries, including 21 different currencies and 43 different payment methods. ClickandBuy is used by Apple iTunes, Skype, MSN, T-Online, Electronic Arts, Meetic, Playboy, SanDisk, Yamaha, UNICEF and many more.
GreenZap is a global online payment service that is shaking up even the alternative payment solution model. Members can send money to anyone with an email address (registration is free to accept payments) and can also accept payments from other members. The company offers merchant tools, allowing online retailers to use the solution as a payment method. Transaction rates vary based on method of payment (bank transfer, credit card) but use a flat fee rather than a percentage of each transaction. Payments can even be free if received through a GreenZap account.
Amazon FPS (Amazon Flexible Payments Services) is a set of Web services APIs that allows for the movement of money between two entities, humans or computers. Amazon FPS functionality includes the ability to send and receive money using credit cards, bank accounts or Amazon Payments balance transfer as payment method. Most exciting is the ability to aggregate micro-transactions into a single, larger transaction using Prepaid and Postpaid capabilities and one-time, multiple, or recurring payments on behalf of customers. Developers interested in testing the platform can utilize the Amazon FPS sandbox to build and test applications without using real money or incurring any transaction charges.
The payment solutions offered by CDG Commerce are not really alternative by definition, but what makes the 10-year-old company worthy of note is that many of the associated fees are eliminated — making the offering attractive to established online retailers as well as those testing the waters of e-commerce. CDG offers no initial setup fees and has removed the monthly gateway fee (savings of $15-25 per month) as well as the per gateway transaction fee ($.05-.10 on every transaction). Coupled with an impressive list of strong fraud prevention services and solutions (Verified by Visa, MaxMind), serious online retailers will see the possibilities. CDG offers an alternative in price to other vendors while maintaining a consistent level of support and functionality as is found elsewhere.
Alternative payment solutions are evolving and will be a major factor in the continued growth of e-commerce. It’s important to choose a solution that works for your business and, more importantly, works for your customers. Some solutions may be better suited for experienced online shoppers while other, more traditional methods will serve those new to e-commerce. As the busy holiday season approaches, find out where your customers stand and what solution they feel most comfortable with. Whether accepting payments through email or by processing credit cards, making the process easy and trustworthy will ensure a positive experience for your customers and help your business take advantage of a booming Internet commerce.