In recent months most of the talk about payment trends has centered on bitcoin and other forms of cryptocurrency, but as that feeding frenzy appears to be cooling down, several other alternative forms of payment are continuing to gain greater acceptance. Unlike Bitcoin which has a lure based on anonymity, these alternative payment services are focused more on the security and convenience of each transaction.
“Trends in alternative payments have been increasing since 2009 due mostly to both the advancement of technology and the loss of trust from consumers in the traditional banking systems following the global recession,” said Mike Ackerman, president of ActuallyHelping.com. “Technology in the mobile commerce world, including the implementation of near-field communication (NFC) payments, a technology that allows cellphones to securely transmit and receive information wirelessly is becoming one indicator of how much that field of payment is growing.”
The way in which we pay using traditional methods, such as credit and debit cards, is now going to become, in my opinion, the next “alternative payment” system by means of the platform used to do so. -Mike Ackerman
The decision by card associations to move away from traditional swipe-and-sign method of credit card payment by October 2015 is also acting as a catalyst for change.
A recent Wall Street Journal article detailed the coming changes and foreshadowed a world where your location at time of payment, digital fingerprint and chip technology will complete replace magnetic strips or card swipes.
As Ackerman explained, “The way in which we pay using traditional methods, such as credit and debit cards, is now going to become, in my opinion, the next “alternative payment” system by means of the platform used to do so. Technologies that use a global business intelligence mindset to build and support payment gateways which provide a seamless and frictionless user experience are going to be the logical evolution of how we pay for digital and non-digital goods.”
One doesn’t need to look any further than the PayPal app used by many to process credit cards presently. The app does allow users to plug a swipe dongle into the mic port of their mobile device, but it also allows a seller to take a picture of the card, tracks the time and location where the device was when the transaction took place and may be the harbinger of a validation system that confirms the buyer and seller were both present in the same location at the same time as a primary method of security far harder to fraudulently replicate than any magnetic strip could ever have been. In the online market, it is a poorly kept secret that Epoch and Paypal E.U. have an arrangement for processing adult site transactions and broadening that arrangement is likely to be only a matter of time.
Several different systems employed by third party billers and individual site networks are built around the concept of one-click billing. While that does not represent a new form of payment processing, it does show a more flexible use of the data input layer that is necessary to initiate any transaction. Especially in adult, being able to just click to buy in a way similar to iTunes is much more effective than requiring potential customers to find their pants, take out their wallet and reenter their card number for each subsequent purchase after their first payment was entered.
“Online consumers from different countries are more accustomed to using different payment methods beyond credit cards,” said Lane Farinacci, global operations director of Processing Partners Inc. “Credit card penetration abroad is just not the same as in North America and from a billing perspective it is crucial to put each potential customer in position to select the billing method that they are most comfortable with at the point of sale.
In short, due diligence requires smart business owners to investigate how people of specific target market prefer to pay their general utility bills, identify their online purchasing habits and adapt the billing methods you offer accordingly. Our experience has been that alternative billing solutions such as Direct Debit,
SEPA and direct bank transfers are absolutely imperative when moving into the European Market place. SEPA Direct Debit is quickly becoming a preferred payment method of customers in the E.U, many of whom do not have credit cards or who choose to avoid using them online. For some, the alternative billing question has become focused extensively on this area of payment evolution, and while it provides E.U. consumers the ability to pay in a method they prefer, it also has the added advantage of greatly reducing any possibility of chargebacks or consumer fraud against merchant site owners.
Within the U.S., a lot of the alternative payment momentum has come from the ACH and one-click payment options offered by some processors.
“The popularity of ACH (online checks) has been increasing for both our mainstream and adult clients, especially recently in light of the breaches with Target and other retailers,” said Mitch Farber, president NETbilling Inc. “The problem with ACH is that the authorizations are not real time. They only utilize our fraud scrubbing tools and databases to verify accounts and amounts. We always encourage our ACH customers to never ship any tangible goods until the ACH actually clears, which can take one to three days.”
From the NETbilling point of view, “The biggest rise has been for merchants using our ability to store cardholder data for future purchases without the customer having to re-enter their card data. Using our data storage functionality, that is built into the NETbilling gateway, a customer only needs to enter the information one time and the merchant never stores any of the data themselves, thus being PCI compliant. This makes rebuys, upsells and cross-sells easy for the customer and increases sales greatly.”