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Cash usage has decreased among consumers of all ages in 2020, while digital wallet usage has surged by roughly 24% year over year.

While cash and cards remain the most popular methods of payment, alternative payments are gaining traction, and retailers who engage in them will have an advantage over their competitors.

We'll go through some of the most popular alternative payment methods in this article, as well as how you, as a retailer, can benefit from them.

What are alternative payment methods?

Alternative payment methods (APM) refer to a variety of digital payment options, such as using a mobile payment app, a digital wallet.  Alternative payment methods do not include cash or major credit cards.

When you use a mobile payment app, or a money order to make a purchase, you're employing an alternative payment method. Peer-to-peer payments, electronic checks, and direct bank account transfers are all examples of alternative payment systems.

Does not really that seem like a lot? Don't worry: While diversifying the means by which clients can pay for your goods or services can be useful, not all of these methods are mainstream enough to invest in for your company. We'll go over the top three APMs for retailers, but first, let's discuss why they're important to them.

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Why are alternative payment methods important for retailers?

Let's look at why APMs are important to customers before discussing why they're valuable to merchants.

Convenience and choice are important to consumers, and they are motivated to use APMs for a variety of reasons. Consumers in the United States were asked to list the top three factors that would lead them to embrace a new payment method by Gartner (full content available to clients). They chose for the following reasons:

• To make payments more secure

• To obtain a financial reward for using a new payment method

• To avoid the fees or charges of using a current payment method

Providing a variety of payment alternatives at checkout allows your consumers to make purchases in the way that they choose, increasing customer loyalty and giving you an edge over competitors that only accept traditional forms of payment.

With that, we'll provide three popular alternative payment options that you should consider investing in right now as a store.

Alternative payment methods for retailers to consider adopting

1. Digital wallets and mobile payments

A digital wallet (also known as an e-wallet) is a software application that allows users to send and receive money electronically, either through peer-to-peer payments or direct transactions with third-party sellers. A digital wallet app like PayPal is an example.

Mobile wallets are just a little unique; they're similar to digital wallets, but they have the extra benefit of allowing you to make contactless payments in stores. Mobile wallets include GooglePay, Apple Pay, Samsung Pay, and Android Pay.

2. Retail financing options

Financing options have traditionally been reserved for significant purchases such as a home, automobile, or household equipment. Financing for smaller retail transactions is becoming more usual these days.

Customers can use retail finance to make purchases with credit levels that aren't available through standard credit cards. Consumers can pay for things in installments using a third-party finance program, which can aid people who would otherwise be unable to afford the whole cost of the purchase up front.

Allowing customers to pay for items in installments, as you might expect, can result in a greater conversion rate. Businesses who have embraced Klarna's platform have experienced a 45 percent rise in average order value and a 30 percent boost in conversion, according to the company.

Many retailers are already seeing the advantages of providing financing solutions. For example, according to our survey, 40% of shops are currently offering clients postponed or buy now, pay later payment alternatives.

Online payment apps may be integrated with your e-commerce store to make it simple to provide clients with financing choices. You can locate a solution that performs this by searching for financing features in our online payment software directory.

Capture more sales with the right software

Accepting new payment methods from your consumers is a simple way to increase revenue and improve your customer experience, and refusing to do so in this day and age could result in you losing business to your competitors who do.

The good news is that alternative payment methods aren't too distant away. All you have to do now is assess your existing retail software stack. Consider what features are missing and inquire if updates are available from your vendors. If you need more assistance, contact one of our retail software advisers, who will provide you with a free list of five top-rated systems that meet your specific needs.

• Retail point of sale (POS) systems handle retail transactions while also providing inventory management, sales reporting, and analytics. Many POS systems are now designed to take mobile wallet payments. Check with your POS system's vendor to discover what kind of alternate payment method functionality is available.

• Online payment software: These technologies can help you improve your eCommerce store's payment procedure. You may administer a gift card program, launch a loyalty program, and set up subscriptions for customers using online payment software.