Mobile Wallet And Alternative Methods Of Payment: Part 2, Alternative Methods Of Payment

By Todd Cripe, manager, Best of Breed Solutions

‘Alternative Methods of Payment' can be defined in a variety of ways, so the first order of business in this month's article is similar to what we did last month when defining Mobile Wallet. At first glance, it seems easy to define what qualifies as an Alternative Payment versus a traditional method of payment. But, there is not a consensus regarding which methods of payment belong in each category. Determining what is traditional versus alternative is a moving target, and has been since the (then) alternative payment medium of credit cards was invented 60 years ago. Credit cards of course are now commonly accepted just about everywhere, so, for simplicity, we'll define traditional payment methods as cash, check, credit cards and debit cards. That leaves any other medium used to pay for goods or services to comprise the Alternative Payments category for this article.

You may be asking yourself, "Why do alternative methods of payment exist and why do my customers care?" To answer those questions, let's presume that if you are reading this article, you are a member of the RSPA and understand how the traditional payment ecosystem works. I am also going to presume that you buy into my opinion that two primary members of the traditional payment ecosystem, merchants and credit/debit card processors, tolerate each other, but that their relationship is one of facilitation and convenience. With those two presumptions, it is easy to answer the first question: Alternative methods of payment exist because they provide a compelling value proposition to the merchant, the consumer, or both.

There are so many types of alternative payments that it is impractical to list them all. A short listing of a few categories and vendors that are noteworthy include: Alternative Currency (Bitcoin, Ven), PayPal, Gift/Stored Value Cards (InComm, Blackhawk), ACH (Midax, NPC), Closed-loop Branded Credit Cards (Kohl's), Cell Phone Currency (U-Mo), and Brand Specific Currency (Facebook Credits, iTunes).