What are Alternative Payment Methods, and why are they crucial for digital commerce?

Alternative payment methods started gaining traction and popularity in recent years, becoming more mainstream than cards. Keep reading to learn what they are and their importance.

João Paulo Notini
March 30, 2023
5 min read
checkout experience

Alternative payment methods – or APMs – are driving digital commerce present and future, especially in growing markets such as Latin America and Africa. How? The first step is understanding the APM concept and why they have been dethroning credit and debit cards in many countries. 

Keep reading to learn more and see why these payment methods are crucial for any company’s online sales and growth strategy.

Understanding the idea of alternative payment methods

In their shortened form, alternative payment methods, or APMs, can be defined as any payment not made by credit or debit cards. Some common examples of APMs include:

  • Account-based transfers
  • Digital wallets
  • Mobile Money
  • Cryptocurrencies
  • Buy Now Pay Later
  • Local cards

Why should digital commerce companies accept APMs?

One of the most common reasons online shoppers give up their purchases is a lack of trust and limited payment options. Depending on the country, not all users prefer to, nor can, pay for cards. 

Thus, accepting APM helps them feel safe and provides greater access. Regarding the digital commerce company’s side, APMs generate several benefits:

  • Potential savings: Credit card processing fees can be expensive and affect profit margins. With APMs, businesses can do away with or save on usage costs. 
  • Increased sales: You minimize the risk of lost purchases by allowing customers to choose how they pay.
  • Seamless checkout experience: APMs simplify payment processes with easy UX, giving consumers fewer transaction obstacles. 
  • Better customer experience: APMs offer customers affordable financing for their purchases with only a few steps. 

Where APMs are growing faster

The pandemic has prompted consumers’ fast adoption of APMs. In growing digital commerce markets, such as Africa and Latin America (LatAm), APMs started gaining traction and popularity in recent years, becoming more mainstream than cards.

New numbers released by the consultancy firm AMI (Americas Market Intelligence), based on 15 LatAm’s economies, reveals that APMs reached 39% of the digital commerce volume in 2022 in the region, an eight-percentage-point increase compared to just two years ago. 

With instant payments, account-based transfers, digital wallets, and even the newcomer – in format, not concept – Buy Now Pay Later, which grew by 300% in 2022, APMs have conquered the Latino hearth. 

Share of APMs in Latin America's e-commerce
Source: Beyond Borders 2022/2023

Meanwhile, in Africa, mobile money is king. Africa is the world’s mobile money front-run, accounting for nearly 70% of volume and more than half of mobile money users worldwide.

share of the transaction volume of mobile money accounts worldwide
Source: Beyond Borders 2022/2023

So, why are these regions leading the APM’s race compared to North America and Europe?

It is all connected to customer behavior, financial and digital inclusion, and the economic background of these regions. Unlike Europeans and North Americans, Latin Americans, and Africans have much less access to credit cards and, in some countries, even bank accounts. They’ve also been used to pay with local methods and prefer APMs.

Diving deeper into the alternative payment methods world 

Alternative payment methods are anything but credit and debit cards. They have several advantages over traditional methods and are essential for any company selling digitally, especially in growing digital commerce markets such as Latin America and Africa. 

To keep learning about APMs, the potential of rising markets, and which payments are the most popular and effective for your targeted audience, we have a guide for you: Alternative Payment Methods Explained.”

By reading this guide, you’ll uncover everything you should know about APMs in Latin America and Africa, including the following:

  • What are APMs, and why do they matter?
  • Examples of APMs in Africa and Latin America
  • How do they differ from traditional payments?
  • The role of APMs in digital commerce
  • The APMs cutting edges for merchants
  • How to know if APMs fit your business model?
What are alternative payment methods? Download the guide

Learn more about our solution and get ready to build a long-term digital payment

João Paulo Notini
João Paulo Notini
Senior Content Marketing | Cross-Border operations at EBANX

EBANX Retail & Marketplace Solution

It’s time to enhance your retail marketplace in Latin America with a tailored approach to payments.

Report: Gaming in Latin America

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