Alternative payment methods: Expanding your options beyond cards and cash

Alternative payment methods (APMs), which include anything beyond those conventional options, are opening up new opportunities for businesses to reduce costs, enhance customer experience, and improve cash flow.

You might be thinking, “Do I really need to worry about APMs if my customers are happy using cards?” It’s a fair question. But according to a recent EY survey, more than 85% of merchants plan to support APMs within the next one to three years. This shift isn’t just about keeping on trend, it’s about solving real operational challenges and gaining a competitive edge.

For small businesses like cafés, independent shops, or professional services, card transaction fees can eat into already tight margins. Some local APMs can reduce processing costs by up to 49%, while also offering faster settlement times, which means better cash flow and fewer financial headaches.

Whether you’re a start-up or a growing enterprise, now’s the time to explore how alternate payment methods can streamline your payments and support smarter, leaner business operations.

What are alternative payment methods?

“So what actually qualifies as an alternative payment method?” Good question. In simple terms, alternative payment methods or APMs, refer to any way of paying that doesn’t involve cash or traditional debit and credit cards. The definition has evolved significantly since the early days of online shopping, when platforms like Amazon and eBay began exploring new ways for customers to pay.

APMs today: More options than ever

Today, consumers and businesses alike have a broad range of alternative payment options at their fingertips, including:

• Digital and mobile wallets like Apple Pay, Google Pay, and Alipay
• Account-to-account (A2A) payments using open banking technology
• Buy Now, Pay Later services
• QR code-based payments, commonly used for quick and seamless in-person transactions
• Cryptocurrency payments, such as Bitcoin or Ethereum
• Prepaid cards and vouchers
• Instant bank transfers like iDEAL in the Netherlands or POLi in Australia
• Recurring direct debits for subscriptions or regular bills

Curious how QR code payments actually work and why they’re catching on across retail and hospitality? Explore this comprehensive guide to QR code payments to learn how they function, what tech is involved, and why they’re more accessible than you might think.

From niche to normal: The rise of alternative online payment methods

What’s especially interesting is how these payment methods have gone from niche options to mainstream preferences. In the UK, over 60% of consumers regularly use digital wallets such as Apple Pay and Google Pay for in-store or online purchases. Meanwhile, the adoption of open banking has accelerated rapidly, with over 11 million payments made through open banking channels in just one month in 2024, up from 6.5 million the year before.

In many cases, these so-called "alternative" payment methods are no longer alternatives, they’re becoming the preferred choice.

How alternative payment methods benefit boutiques and small retailers

If you run a boutique or independent retail store, you might be thinking, “We already accept cards, why change what works?” But here’s the thing: card processing fees can quietly chip away at your profits. A small clothing shop taking in £20,000 a month via card payments could be losing £400 to £600 monthly in fees alone.

“Would my customers actually use these newer payment options?” That’s a fair concern. But consumer habits are shifting fast. In fact, 27% of shoppers no longer carry a physical wallet, opting to tap their phones instead. And with QR code payments projected to reach £2.1 billion globally by the end of 2025, your customers may already be expecting more flexible, tech-forward ways to pay.

Take the example of a local gift shop that introduced account-to-account (A2A) payments. These allow customers to pay you directly from their bank account, no middleman, no card network fees. As a result, their transaction costs dropped by nearly 50%, and funds landed instantly, instead of waiting 2 to 3 working days for card settlements. That immediate cash flow let them reorder top-selling products faster and run their business more efficiently.

Looking to improve cash flow and reduce card payment fees for your business? Find out how Wonderful’s open banking payments can lower costs, speed up settlement times, and offer a seamless experience for both you and your customers.

For boutiques dealing with higher-value purchases, offering Buy Now, Pay Later options has shown remarkable results. When customers can spread payments over several weeks without interest, they're more likely to complete purchases they might otherwise abandon. Merchants have reported sales increases of up to 30% after implementing BNPL options.

Are alternative payment methods right for service-based businesses?

If you run a service-based business, whether it’s consulting, design, home repairs, or personal care, you might be wondering if alternative payment methods really apply to your setup. The short answer? Absolutely. These options can significantly improve the client experience and help ensure you’re paid promptly.

Think about how often payments get delayed simply because clients have to dig out a card or write a cheque. Sending a quick payment link can streamline the whole process, turning a potential two-week wait into a same-day payment. They’re a simple yet powerful way to accept payments without needing a full e-commerce setup.

Take this example from a landscape designer: "Before, I’d send PDF invoices and wait weeks for clients to post cheques or call with card details. Now, I just include a payment link. My average payment time has dropped from 21 days to just 2. Plus, I’m saving over 40% on fees compared to credit cards by offering account-to-account options."

Not sure how payment links work or when to use them? Explore this guide to payment links to see how they simplify payments for service-based businesses and help you get paid faster, without added complexity.

If your business relies on recurring payments, like memberships or retainers, direct debit can be a game-changer. It reduces late payments and minimises admin time, freeing you up to focus on delivering great service.

Wondering whether to use recurring card payments or direct debit for your business? Explore this guide comparing recurring card payments and direct debit to understand the pros, cons, and ideal use cases for each, so you can make the best choice for your cash flow and customer experience.

Which alternative payment methods make sense for food trucks and mobile businesses?

Running a mobile business, like a food truck, market stall, or on-location service, comes with unique payment challenges. Maybe you’ve dealt with cash-only customers, card readers that drop out in low-signal areas, or the hassle of juggling multiple payment devices.

You might be wondering: "How can I take payments reliably, without investing in expensive equipment or relying on a stable internet?"

That’s where mobile point-of-sale (POS) systems step in. These lightweight, flexible tools turn a smartphone or tablet into a full-featured payment terminal, ideal for businesses that need to stay mobile.

Modern mobile POS systems often include features like:

• QR code generation for quick, contactless payments
• Pay-by-link functionality, letting customers pay remotely via a secure link
• Support for account-to-account (A2A) payments, powered by open banking
• Fallbacks for poor signal areas, like offline transaction queuing

For example, a food truck operator shared: "I used to lose sales when our card reader failed or customers didn’t have cash. Now I generate a QR code right from my phone, and they scan it to pay instantly, no extra hardware or strong signal needed. I get paid faster and can restock before the next day."

Whether you're taking payments kerbside or at a festival, mobile POS solutions are making it easier and cheaper than ever to get paid quickly, wherever your business goes.

Looking for the best mobile POS systems in the UK?  Explore this guide to mobile POS systems to find tools that help mobile businesses accept QR code, link-based, and open banking payments, without the headaches of traditional setups.

What's the cheapest alternative payment method to receive payments on my website?

If you run an e-commerce business, you know that payment processing fees eat directly into your profits. It’s no surprise one of the most common questions is: “What’s the cheapest way to receive payments on my website?”

The answer often lies in account-to-account (A2A) payments powered by open banking. These payments connect directly to your customer’s bank account, no card networks involved. That means no percentage-based card fees, often reducing your transaction costs by 40 to 50%. For an e-commerce business processing £50,000 a month, that could mean saving over £1,000 monthly.

But it’s not just about cost. Today’s customers expect a seamless, flexible checkout experience. If their preferred payment method isn’t offered, they’re more likely to abandon their cart, something 70% of merchants admit is affecting their sales.

That’s why offering a diverse mix of alternative payment methods for e-commerce is crucial. This includes:

• Digital wallets like Apple Pay and Google Pay, which streamline mobile checkout and reduce friction.
• Payment APIs that facilitate A2A transactions through open banking, ideal for websites wanting to integrate modern, secure payment flows with minimal overhead.
• Buy Now, Pay Later (BNPL) for greater flexibility on higher-ticket items.
• Payment links and instant bank transfers, which provide convenience for both sides without needing full ecommerce infrastructure.

Curious how Payment APIs work and when to use them? Explore this guide to payment APIs to understand how APIs powered by open banking technology enable secure, low-cost payments for online businesses.

By combining these tools, not only can you cut payment fees, but you also create a faster, more intuitive experience for your customers, something that’s becoming essential as mobile e-commerce revenue is expected to hit £2.6 trillion globally by 2028.

What are the most convenient alternative payment options available today?

When it comes to payments, convenience is king. More than ever, customers choose payment options based on what’s fastest, easiest, and least intrusive.

Digital wallets are leading the way, securely storing payment information and enabling one-tap checkout both in-store and online. In North America, digital wallets now account for 32% of all transactions, while in Europe, they’ve already overtaken cards, making up 44% of payments compared to 42% for credit and debit.

But convenience isn’t just about speed. Digital wallets use tokenisation, meaning a unique code replaces your actual card number for every transaction, reducing fraud risk and increasing peace of mind.

Buy Now, Pay Later (BNPL) options offer a different kind of convenience: flexible financing without the traditional credit card. Customers get what they need today, and split payments over time, interest-free in many cases. With global BNPL transactions forecasted to reach $565.8 billion by 2026, this method is clearly here to stay.

Account-to-account (A2A) payments powered by open banking APIs are also gaining popularity, especially for businesses looking to reduce fees while still offering a fast, secure experience. These payments happen in real time, require no card details, and often integrate seamlessly into checkout flows via payment APIs or payment links.

From a business perspective, many of these modern alternatives go beyond convenience at checkout, they offer better reconciliation, real-time settlement, and smoother financial reporting than traditional banking or card systems.

Want to compare the most convenient ways to take payments today? Explore this guide to accept payments online and see how digital wallets, A2A payments, and payment APIs are reshaping the checkout experience for businesses and their customers.

What about regional payment preferences?

If you're expanding into new markets, it's crucial to understand that payment preferences vary widely by region.

In the UK, while credit cards are still common, digital wallets and open banking options like Pay by Bank are gaining traction. This method enables customers to pay directly from their bank account, offering lower fees for merchants and a smoother experience for users. With global usage projected to rise significantly by 2027, the UK is positioned as a key growth market.

Buy Now, Pay Later (BNPL) is also expanding rapidly, with providers such as Klarna, Clearpay, and Laybuy appealing to younger shoppers seeking more flexible payment terms.

Beyond the UK, regional preferences differ sharply. In China, mobile wallets like Alipay and WeChat Pay dominate. In Poland, online bank transfers are the norm, while in the Netherlands, iDEAL remains the top online payment method.

Understanding and adapting to these local behaviours can make a real difference to customer engagement and conversion.

Want to learn how Pay by Bank works and why it’s becoming a go-to choice for UK businesses? Explore this detailed guide to Pay by Bank for an easy-to-understand breakdown of its benefits, setup, and real-world use cases.

Challenges of adopting alternative payment methods

Implementing alternative payment methods (APMs) might sound complex, but it’s more accessible than ever. Thanks to modern payment APIs and plug-and-play integrations, most businesses no longer need deep technical expertise. Providers like Wonderful in the UK offer developer-friendly tools, including a WooCommerce payment plugin, that make it easy to start accepting digital payments on your Woo store with minimal fuss.

For in-person sales, many modern retail POS systems already support APMs such as digital wallets, bank transfers, contactless cards, and QR codes. Solutions like Wonderful’s Soft POS app, One, even allow Android devices to function as tap-to-pay terminals, no extra hardware needed.

That said, the biggest challenge is often strategic, not technical. Choosing the right APMs depends on your business model, customer base, and transaction patterns. A boutique might focus on digital wallets and BNPL options, while a food truck might prioritise fast contactless payments.

Customer adoption is another key hurdle. People tend to stick with familiar payment habits, so businesses need to actively promote new options. Clear signage at checkout, on-screen prompts, or limited-time incentives can all help. Staff should be trained to explain benefits and troubleshoot basic queries.

Behind the scenes, seamless integration with accounting and inventory systems is essential. Any friction here can disrupt operations. Working with a payment service provider that offers robust integration support can reduce this risk.

For businesses operating across regions, managing local payment preferences can be tricky. What works in the UK might not be relevant in Europe or Asia. A good fintech partner can help unify these methods under one platform, simplifying operations.

Finally, while APMs often boast strong security features, they must be properly configured and monitored. Choosing trusted providers with strong security credentials helps safeguard customer data and maintain trust.

Where are payment technologies headed next?

The payment space is evolving fast, with a few standout trends shaping the future of alternative methods.

Biometric authentication, like fingerprint and facial recognition, is becoming more common, offering both added security and a smoother checkout experience. As adoption grows, we could see fewer physical cards in daily use.

Account-to-account (A2A) payments, driven by open banking, are also gaining momentum. With lower fees and faster settlements, they’re becoming a smart alternative to card-based systems, especially for cost-conscious businesses.

Cryptocurrencies remain niche but are slowly becoming more usable, particularly for tech-forward audiences. While not mainstream yet, their growing stability and accessibility make them a space worth watching.

Finally, embedded finance is pushing payments into new places, think paying directly within messaging apps or social media. This kind of seamless experience could become the norm, especially for mobile-first businesses.

Keeping an eye on these trends can help you stay ahead, and ensure your payment strategy is ready for what’s next.

Making the switch: Beyond the credit card

Once you understand the landscape of alternative payment methods (APMs), the natural next step is deciding where to start. The best approach? Focus on your customers. What payment options do they already use and trust? Where do current methods fall short?

For most small businesses, digital wallets are a strong entry point. They're popular with consumers, simple to implement, and provide clear advantages for both speed and security. From there, account-to-account (A2A) payments offer a cost-effective alternative to credit cards, especially for high-volume or recurring transactions.

Adopting APMs doesn’t mean abandoning credit cards. The goal is to expand options, not restrict them. A flexible payment setup that includes both traditional and alternative methods allows customers to pay however they prefer, improving satisfaction and potentially increasing conversion rates.

Integrated payment solutions now make it easier than ever to manage multiple payment types from a single dashboard. Unified reporting and reconciliation features simplify back-office operations and offer greater visibility into cash flow.

Whether you run a boutique, offer services, sell online, or operate a mobile business, APMs present a real opportunity to reduce fees, enhance the customer experience, and build a future-ready payment strategy.

In today’s market, waiting isn’t a strategy. The shift toward alternative payments is well underway. By making the switch now, you’re not just keeping up, you’re gaining an edge.

FAQ

What are the most popular alternative payment methods in the UK?

Popular alternatives include PayPal, Apple Pay, Google Pay, Klarna (Buy Now, Pay Later), bank transfers, and cryptocurrencies like Bitcoin. These methods offer convenience, security, and flexibility for both consumers and businesses.

Are digital wallets like Apple Pay and Google Pay widely accepted in the UK?

Yes, digital wallets such as Apple Pay and Google Pay are widely accepted across the UK, especially in retail stores, online shopping platforms, and public transport systems.

Is 'Buy Now, Pay Later' (BNPL) a safe payment option in the UK?

BNPL services like Klarna are regulated in the UK and offer consumers the ability to defer payments. While convenient, users should ensure they can meet repayment terms to avoid potential fees or credit issues.

Are cryptocurrencies like Bitcoin commonly used for payments in the UK?

Cryptocurrencies are gaining popularity in the UK, particularly among tech-savvy consumers. However, their acceptance as a payment method is still limited compared to traditional options, and their value can be volatile.