Europe Fintech Paytech

Alternative Payment Methods: The Key Factors Driving the New Era

Due to the constantly evolving behaviour of shoppers, the rate of alternative payments adoption is increasing rapidly across the globe. With the Covid-19 pandemic causing consumers to go digital as well as shop online, methods such as mobile payments and e-wallets are becoming ever more popular.

James Booth is VP Head of Partnerships, EMEA at PPRO, a payments services company that helps consumers pay with their local payment methods globally. James has over a decade worth of experience in the financial sector, with a large portion of that working in the fintech industry. In his current role, he leads the new business and Partner development teams in managing PPRO’s strategic partnerships.

Here, James discusses the key factors in driving a new era of alternative payment methods, as well as which companies are leading the charge on the adoption of APMs.

Thanks to evolving consumer shopping behaviour, the rate of alternative payment adoption is continuing to move at lightspeed. Following the nation-wide lockdown earlier this year, the shift to online shopping continues to accelerate, and with it the use of alternative payment methods (APMs), such as mobile payments, bank transfers, pay later schemes and e-wallets.

Just this month, Klarna, a payment provider operating on a buy now, pay later concept, was crowned one of Europe’s biggest privately owned financial technology providers – with nine million consumers in Britain having used the service, and 90 million users worldwide.

UK consumers are more inclined than ever to try a range of different payment methods, such as Klarna, to provide a more convenient payment experience. In the UK, any payment method other than cash and credit or debit cards is viewed as an alternative payment method. However, across the globe, these forms of payment are considered “local” payment methods due to their broad adoption.

With over 450 significant local payment methods in use across the globe, merchants who sell cross-border are learning it is no longer adequate to simply offer only credit or debit card payments to consumers.

From an increasing use of PayPal to bank transfers and mobile wallets (Apple and Google Pay), consumers now have more choice of payment methods than ever before.

So, what is influencing the adoption of alternative payment methods amongst UK consumers? Who is leading the charge? And, what does the future hold as we enter a new era of APMs?

Younger generations are driving adoption

With Generation Z growing up with social media and smartphones, it’s no surprise that there’s a buzz about new payment methods in the news and on social media, which is a critical driving force for APM adoption. According to statistics, 31% of Generation Z consider this the biggest motivation to try new payment methods, whilst for Millennials, 37% said that merchant acceptance is their main driver.

It seems confidence in these methods is being predominantly led by younger generations in the UK. According to PPRO’s recent survey, 42% of millennials (born between 1980-1993) and 35% of Generation Z (born between 1994-2001) feel confident using, or have used, either a bank transfer or e-wallets as methods of payment. And, with 33% of Generation Z increasing online spending since the beginning of the pandemic, they are a force not to be underestimated.

Reaching new levels of convenience

While younger generations have been early APM adopters in the UK – increased convenience and security remain a key driver across all age groups. In fact, when choosing to use a payment method, security was favoured over reputable brand image, with over half (59%) of UK consumers believing it to be the most important factor when choosing a payment method.

More consumers shopping online has encouraged a rise in fraud – and as a result, consumers are growing increasingly concerned for the safety of their transactions. Strong Customer Authentication (SCA) – as required by the Payment Services Directive (PSD2) – is just one regulation coming into force to combat fraud. Ensuring compliance with multi-factor authentication will be vital to reassure customers as they continue to shop online, and support future confidence in APMs.

But, merchants should be warned; demonstrating security and providing a simple, easy checkout are a delicate balance. A major element of frictionless payment experience is making sure the checkout page has the right payment mix for the region and target age group. With more than one in two (50%) global online shoppers making purchases on foreign websites, and the fact that 54% of European cross-border e-shoppers are millennials, payment preferences will only continue to become more pivotal to attract shoppers from across the globe.

The future of APMs and e-commerce growth

It is safe to say the explosive growth in e-commerce and cross-border payments across the globe has really set the stage for the expansion of APMs this year. And, with further growth ahead, APMs are quickly becoming not-so-alternative.

We are moving away from traditional shopping practices and today, buyers no longer want to be restricted by traditional payment methods, such as cards and cash. Retailers who choose to ignore the payment preferences risk losing 44% of UK customers. Merchants who offer a variety of payment methods that appeal to all ages, cultures, and regions will be able to widen their offering to a more extensive customer-base.

The opportunity for merchants offering APMs is huge and is a necessity for every merchant seeking to grow their business – certainly domestically and especially across borders.



  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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