For adult merchants, especially adult website operators, the notion of “alternative billing” hasn’t really evolved from its Ameri-centric “anything but MasterCard or Visa” origins — but the options for serving the rest of the world’s consumers have increased dramatically over the years; bringing opportunity for businesses to serve countries where credit and debit cards are not the primary payment mechanism — as well as those coveted customers from the U.S.
With Europeans increasing their online spending and relying on E.U. direct debit as a preferred payment option with localized cards targeting users in specific regions, it’s hard to call debit cards “alternative,” but they represent perhaps the most vibrant segment of this market sector — but they are not the only option these days, each of which offers different degrees of desirability, depending on your business and marketing models.
Cryptocurrency is gaining in popularity. Some speculate that the blockchain may change the world of financial institutions. -Mia Hyun, Mobius Payments
As with all things digital, technological innovation is driving alternative billing methods, with contactless payments and electronic wallets, along with new business models extending the notion of “payments,” such as one-click and in-app purchases, cross-sells between merchants and other mechanisms becoming commonplace — although restrictions on adult merchants continue to throttle the industry’s options.
To uncover the newest trends in adult alternative billing techniques, XBIZ turned to the industry’s top payment processors for their most current insights.
According to Webbilling’s B2B senior sales manager, Eva Zankel, merchants targeting the booming European market are exploring different opportunities for additional revenue streams.
“Localized payment solutions are increasingly in demand,” Zankel explains, “and becoming a vital key to the direct success of many internet businesses looking for serious growth in the European market.”
“While offering options such as SEPA Direct Debit and SOFORT, the focus is more and more on maximizing the potential by either adding cross-sales when processing with SEPA Direct Debit or offering a less chargeback-risky solution such as SOFORT and still be able to rebill,” Zankel adds. “The possibilities within certain payment methods have gotten more attention over time.”
Harmik Gharapetian, Epoch’s vice president of sales and marketing, told XBIZ that today’s customers need options — and he would know, as the company offers merchants a diverse range of payment choices covering around 60 currencies and 40 payment types.
“Alternative payment options give customers a choice,” Gharapetian says, “while merchants looking for cross-border customers can ensure that the preferred regional payment types are available.”
Gharapetian says that alternative billing options are ideal for targeting specific regions of the world, as well as unique demographics.
“Understanding when to present specific payment options can be challenging on a merchant level, as this process is more involved than simple geo-targeting,” Gharapetian explains. “Not all alternative payment types work the same way, and not all are desirable in every billing scenario.”
Gharapetian’s goal is to match the customer and billing option to the most beneficial payment type.
“Payment Service Providers (PSPs) are well-suited for this task, and offer protections and special services that would be either difficult or nearly impossible for an individual merchant to achieve and manage on their own,” Gharapetian concludes. “For merchants with international traffic, using a PSP with various payment options is an ideal way to increase the bottom line.”
Although diversification is important, alternative billing methods typically account for only a very small percentage of online payments, so simply adding payment options to try to capture every sale may actually backfire by eating more in fees, lost sales, and support costs than they earn. This is one reason why some observers believe alternative payment solutions will continue to face a fragmented future.
This only means that it is important to use the right tool for the job, using alternative billing options for specific offers or markets where more profitable billing methods may not be available, such as emerging nations and unbanked populations.
Traditional credit and debit card billing is expected to continue dominating adult e-commerce, but there are also increasing calls for new forms of cryptocurrency and micropayment processing.
“Cryptocurrency is gaining in popularity,” Mobius Payments President Mia Hyun told XBIZ, noting that “Some speculate that the blockchain may change the world of financial institutions.”
Regardless of the specific payment method or technology, merchants will always find a way to separate customers from their cash. Alternative billing plays a vital role in this equation, where global audiences require a global range of choices in payment processing — while merchants require easy and profitable transaction processing — but having more billing options is not the same as having better billing options.