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Best Alternative Payment Methods For Small Businesses In 2024
Cryptocurrency, ACH, digital wallets, or "Buy Now, Pay Later" are all possible alternative payment methods you may want to accept at your small business. Read our guide to find out the best options.
Davina began writing for small businesses in 2018 and has since gained expertise in the SaaS industry. She earned her Bachelor’s of Arts in English Literature from SUNY Geneseo in 2018. She currently resides in New York.
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Davina WardDavina began writing for small businesses in 2018 and has since gained expertise in the SaaS industry. She earned her Bachelor’s of Arts in English Literature from SUNY Geneseo in 2018. She currently resides in New York.
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Frank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law, and currently resides in Paso Robles, California.
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Frank KehlFrank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law, and currently resides in Paso Robles, California.
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Alternative methods of payment, such as PayPal and Google Pay, are becoming increasingly common, and small businesses should offer them at checkout, whether customers are paying online or in person.
This guide explains what alternative payment methods are and the types of alternative payment methods available. We researched 15 popular alternative methods of payment to help you decide which ones to offer as a small business owner.
Alternative payment methods (APMs) are any payments without using cash, credit cards, or debit cards. Examples of alternative payment methods include cryptocurrency, ACH, buy now, pay later options, digital wallets, and more.
Alternative payments may be referred to as alternative methods of payment (AMOPs) or nontraditional payments.
Types Of Alternative Payment Methods
In general, there are five types of alternative payment methods.
The five types of alternative payment methods encompass a range of popular alternative payment method options. For example, Apple Pay and Google Pay fall under the digital wallet category, while ACH and eCheck payments fall under the bank transfer category.
Here’s a breakdown of the five types:
Digital Wallets
A digital wallet is an app that stores personal payment information and can be used as a prepaid account that stores funds. Some of the most popular digital wallets include Google Pay, PayPal, Apple Pay, Cash App, Venmo, and AliPay.
In addition to serving as a storage center for payment information, most digital wallets enable users to load money into an account associated with the platform itself, creating a digital wallet balance that can be used to make in-person, online, and peer-to-peer payments. Notably, digital wallets may also store tickets for events or transit, coupons, IDs, and more.
Digital and mobile wallets provide enhanced security for their users since they don’t store customer data on a merchant’s servers.
Cryptocurrency
Cryptocurrency is a form of decentralized virtual currency, with the most popular cryptocurrency forms being Bitcoin and Ethereum.
Cryptocurrency is popular among the younger crowd and those who are involved in the decentralized finance community. However, it is far more commonly used in investments, than it is as a business payment method.
Read up on the best cryptocurrency payment gateways if you’re interested in incorporating cryptocurrency payments with your current payment methods.
ACH transactions process over an electronic computer network known as the Automated Clearing House (ACH) network to help merchants save on processing costs and provide a secure, convenient customer experience.
One of the biggest pros of accepting ACH payments is the fact that ACH payments and bank transfers typically cost less than debit or credit card payments and are typically free to your customers.
Wire transfers are electronic payments made between two different banks. Using wire transfers, individuals may send payments that surpass the $100,000 daily send limit on ACH transfers.
Buy Now, Pay Later
Buy Now, Pay Later options allow customers to pay a portion of their bill upfront and enter into an installment loan agreement with a lender. Offering Buy Now, Pay Later as an alternative payment method may encourage customers to make big-ticket purchases by lowering the purchase’s entry cost.
Additionally, despite the program’s name, merchants still receive the full purchase amount upfront when a customer uses Buy Now, Pay Later as a payment option.
There are currently many very popular Buy Now, Pay Later providers, including Klarna, Afterpay, Affirm, PayPal Pay In 4, Sezzle, and Zip.
Promotional Or Loyalty Program Payments
Promotional or loyalty programs may allow customers to accumulate points or credits that can be used to pay for a business’s goods or services — in a transaction, those points or credits are considered an alternative payment method.
One of the most popular examples of using promotional credits as a form of payment includes using a business credit card to accumulate airline miles and cover travel costs.
Business owners have complete control over the execution of the reward programs they want to offer customers and can easily manage loyalty programs through their POS’s loyalty program feature, using specific software, or manually. Customers will sign up for the program and reap the rewards, it’s pretty simple.
8 Top Alternative Payment Methods
The best alternative payment methods are affordable, secure, popular with customers, and integrated with existing payment processing solutions.
Why We Chose PayPal As The Best Overall Online Payment Service
We awarded PayPal the top spot as the best alternative payment method because its popularity, convenience, versatility, and feature set cannot be beaten. Merchants can sign up for a free PayPal business account to gain access to PayPal's extensive eCommerce software suite, including integration options that can bring PayPal to your in-person POS system or online store as an alternative payment option.
PayPal's reach is extensive, with millions of users across the US and millions more internationally. As PayPal serves as a digital wallet, peer-to-peer payment facilitator (i.e. payments between friends and family), and convenient contactless payment option, its versatility makes it a valuable solution for businesses and their customers alike.
PayPal Pricing
If you are using PayPal as a supplemental payment option, then you may have to pay additional fees depending on the payment processor or POS system you currently use. Additionally, you may have to pay PayPal’s processing fees, which come in at 3.49% + $0.49 when using PayPal’s digital payment methods.
PayPal also offers paid plans that start at $5/month for those businesses that want more advanced payment management.
PayPal Features
PayPal’s features are extensive, as the company offers software and services for payment processing and eCommerce. However, we’re focusing on PayPal’s features as an alternative payment method, which include:
Smart payment buttons that change based on the transaction’s contextual details
Additional security with customers signing into their PayPal account before payment
Tons of integrations with in-person POS and eCommerce software
Extensive developer tools for businesses with online shops
Support for multiple payment types and multiple currencies, including Apple Pay, Bitcoin, Venmo, and more
Social feed provides free marketing for businesses
Cons
Customers must have a Venmo account
Transaction limits may be restrictive for larger businesses
Limited functionality beyond payment acceptance
No FDIC protection
Why We Chose Venmo For Solo Proprietors Offering In-Person Services
We believe that Venmo works especially well for individuals providing in-person services, such as photography, makeup application, or barber services. These businesses tend to start as side hustles with friends and family serving as first customers, so Venmo payments work exceptionally well here.
Venmo is simple to set up, and if you already have a personal Venmo account, you can simply add a business profile to your account in a few clicks. Venmo can also be added as an option to an existing Braintree or PayPal account for online purchases, though you'll end up paying higher processing fees.
Note: We don't recommend Venmo for more established businesses or those accepting primarily online payments, due to Venmo's transaction limits, higher fees for online payments, and no support for sales tax.
Venmo Pricing
Venmo’s payment processing fees are 1.9% + $0.10 per transaction using the Venmo app or a Venmo QR code. Online payments using Venmo have a higher processing cost at 3.49% + $0.49 per transaction. Additionally, you may be required to upgrade your account with your current processor to begin accepting Venmo payments.
Venmo Features
Compared to the other options on this list, Venmo’s features as an alternative payment method are very limited for merchants. However, Venmo can easily handle payment acceptance in person, offers some customization options, and even offers tipping.
Here’s a more in-depth look at Venmo’s features:
Simple sign-up for existing and new Venmo users
Optional QR payment acceptance
Accept online payments with Venmo through PayPal or Braintree
Contactless payments and quick payments via mobile phone
Option to turn on tipping
Free, customizable business profile to show off your brand
Payments to your business may show up in your customer’s feed as free marketing to their friends
Unlimited number of transactions for verified businesses
Cons
Challenging to maintain personal and business Cash App accounts
Limited functionality beyond payment acceptance
Payment processing limits
Why We Chose Square Cash For Businesses Using Square
We chose the Square Cash App for Square users because the app offers an accessible and convenient alternative payment method for businesses that are already within the Square ecosystem. If you use Square Cash to accept payments from customers, you'll make it easy for them to pay your business from their Cash App digital wallet or Cash balance.
The Square Cash App includes notable payment processing limits, which means merchants who process lots of high-ticket transactions should consider other alternative payment solutions. Since Square Cash's support team is separate from Square's standard support, this app is also poorly suited to merchants new to setting up alternative payment methods for their customers.
Read our guide to the Square Cash App for more on whether this alternative method of payment is right for your business.
Square Cash App Pricing
Sending cash for personal use is free with Square Cash, although merchants pay a 2.75% fee per transaction and a 1.25% (min. $0.25) fee on instant deposits sent to their bank accounts.
Square Cash Features
Square Cash App’s features are limited for merchants, but make it easy to accept and manage customer payments. You’ll be able to offer Square Cash App as an online and in-person payment option (provided you already use Square and have compatible hardware or software).
Here’s a look at Square Cash App’s features as an alternative payment method for businesses:
Credit and debit card payment acceptance
Verified business accounts can accept an unlimited number of payments
Allow customers to pay via QR code or payment link
Create custom cash tags to bolster your business’s brand
Accept Square Cash App payments without a Square Cash App account via Square’s hardware or software
Leave notes on transactions to track purchases from within the app
We chose Zelle as one of the best alternative payment methods because it offers free and fast bank transfers, even for business-to-business (B2B) transactions. We think it's a great option for start-up businesses that need to quickly process low-volume payments or eCommerce businesses that are looking to keep payment processing costs as low as possible.
However, Zelle does have some limitations. Merchants can't receive any funds sent from a debit or credit card to their Zelle account, which makes Zelle a less-than-perfect option for very small businesses and micro-merchants that thrive off individual, repeat customers.
If you're running a business that mainly relies on credit cards for payments, this isn't the app for you. Consider alternatives like Venmo, which lets merchants send, receive, and request funds using credit cards.
Zelle is completely free for business use and doesn’t charge a single fee. In rare cases, your bank may charge fees, but those won’t be coming from Zelle.
There is some concern that Zelle will eventually begin charging for its services, but that has yet to come to fruition.
Zelle Features
Zelle offers fast and reliable bank transfers for both businesses and customers alike. However, like many of the alternative payment options on this list, it’s limited and should only be used as a supplemental payment option. Here’s a breakdown of Zelle’s features:
Receive funds from completed transactions almost immediately
Send and request payments via Zelle mobile app, supporting bank apps, email, or phone number
FDIC-insured transactions
Business accounts are supported by many popular US banks, including Bank of America, Citi Bank, USAA, Capital One, and more
Can be used to accept online and in-person payments
Full featured digital wallet
Excellent cybersecurity features
Apple doesn’t charge merchants to use Apple Pay
Cons
Requires NFC-capable card reader or iPhone
Limited to Safari browsers
Customers must use Apple products to use Apple Pay
Why We Chose Apple Pay As The Best Digital Wallet For Apple Users
We chose Apple Pay because it is one of the most feature-rich digital wallets on the market and is natively built into the Apple ecosystem. As Apple Pay serves as a means to store card information, transit tickets, event passes, coupons, and a cash balance, accepting Apple Pay allows merchants to provide customers with many different payment options without too much hassle.
As for popularity, it's hard to beat Apple, especially in the US market. Apple Pay is built into Apple devices, allowing customers to use it from compatible iPads, iPhones, Apple Watches, and Macs.
Note: We'll get into digital wallets for Android devices a little later.
Apple does not charge merchants any fees to use Apple Pay, however, merchants using Apple Pay will be on the hook for their payment processor’s fees depending on whether the transaction utilizes a debit or credit card.
Apple Pay Features
As one of the most popular digital wallets in the world, Apple Pay offers a comprehensive feature set for both businesses and their customers. Here’s a look at what Apple Pay can do:
Google Pay is free to use for both merchants and customers
Google Pay API and developer tools for eCommerce businesses
Cons
Requires NFC-capable card reader or iPhone
Limited bank support
Why We Chose Google Pay As The Best Digital Wallet For Android Users
We chose Google Pay for small businesses because of its extensive global reach, excellent functionality as a digital wallet, and strong security features.
Google Pay allows customers to store their credit cards, debit cards, cash, and loyalty cards in one place. It's especially useful across the web, providing users with easy access to their payment methods during eCommerce transactions.
Google Pay stands out as a secure solution. Google Pay safely stores card information which it encrypts using tokenization technology. Merchants who use Google Pay don't need to worry about storing customer card info on their own system and can reduce the risk of fraudulent charges and chargeback claims.
Similar to Apple Pay, Google Pay is free to use for merchants and requires an NFC card reader.
Google Pay Pricing
Google Pay doesn’t charge merchants any fees to use, but merchants are still required to pay the processing fees charged by their payment processor.
Google Pay Features
Google Pay’s functionality as a digital wallet allows customers to easily make purchases online and in-person, using their Android device or Google account online.
Here’s a look at all the things Google Pay can do as an alternative payment method:
Allow customers to store and manage multiple payment methods, including debit and credit cards
Solid security features, including tokenization
Google Pay API and Google Pay website button options
Free Google Pay acceptance stickers
Make online checkout faster with Google Pay’s payment Autofill features
Google Pay is supported by multiple payment processors, including Chase Merchant Services, Stripe, Square, Helcim, and more
Why We Chose ACH & eChecks For Low-Cost Recurring Payments
We chose ACH because we believe it offers solid versatility for merchants who rely on subscription products and services, recurring online payments, eCommerce payment options, and electronic invoicing. ACH and eCheck payments are also great for merchants who conduct business largely online and want to avoid credit card interchange fees.
ACH and eCheck payments offer convenience but fall short when it comes to speed. These payments are slow compared to other payment types since they need to travel from one point across the ACH network to another.
Merchants also need to verify that their payment service provider offers ACH options in the first place since ACH/eCheck payments are less prevalent than traditional credit card payments.
ACH/eCheck Pricing
Costs to start using ACH/eCheck payments vary depending on your ACH payment provider. Certain processing companies impose relatively high per-transaction fees, while others charge low per-transaction fees but high monthly fees.
ACH/eCheck Features
ACH payment acceptance is relatively simple.
ACH payments are relatively secure
Support for payment automation and recurring payments
Relatively lower fees than traditional credit card processing and paper check deposits
Same-day processing options
Many banks don’t limit ACH processing for businesses
ACH payment processing is supported by major payment processors, including Stripe, Square, PaymentCloud, National Processing, and Host Merchant Services
Most adult customers in the US are eligible for Affirm
Multiple integration options and an API
No monthly, integration, or annual fees
Customers are never charged late fees
Cons
High transaction cost
Doesn’t support international payments
Why We Chose Affirm As The Best Buy Now, Pay Later Payment Method
We chose Affirm as the best buy now, pay later app for accepting payments in installments. When customers choose to use Affirm, they are signing up for a short-term loan that is handled by Affirm. You receive the full cost of the transaction upfront, minus your transaction fees.
Affirm provides your customers with more spending power and reduces the upfront costs they pay for larger purchases.
While Affirm charges merchants a high per-transaction fee, there's no doubt that Affirm's services could result in a significant increase in sales, which is a more than fair trade-off.
Affirm integrates with payment processors and eCommerce platforms, such as Shopify, Stripe, BigCommerce, WooCommerce, Magento, Lightspeed, and many more.
Affirm Pricing
Affirm charges merchants a merchant discount rate (MDR) and a transaction fee, which varies based on your business’s size, assessed risk profile, and the Affirm program you choose.
Affirm states that its typical fee is 5.99% + $0.30 per transaction.
Affirm Features
Affirm offers basic features for merchants, but this helps to keep things simple. Here’s a look at Affirm’s best features:
Merchants can control loan terms and minimum qualifying spend
Customer eligibility is limited to being 18 years old, having an SSN, and having a US phone number with SMS capabilities
Affirm integrates with top payment processors and eCommerce platforms
Affirm only performs a soft credit check for customers, so it won’t hurt their credit
Affirm can be used in-store and online
No late fees for customers
Affirm now offers buy now, pay later services for B2B businesses
Should I Add Alternative Methods Of Payment To My Business?
Pros
Helps to avoid high card processing costs
Makes checking out more convenient for customers
Can speed up in-person payments
Some APMs boast a greater emphasis on cybersecurity
Cons
Merchants may incur added processing costs
Overwhelming number of APMs to choose from
Additional administrative tasks for merchants
If you’re considering adding alternative payment solutions to your business, take the time to survey your customers about which alternative payment options they would like to see from your business. If it’s not possible to directly ask your customers about their payment preferences, consider your current customer base and how your business works.
For example, if you’re running a NYC deli with a bustling morning rush, adding Apple Pay or Google Pay to speed up transactions will cater to those customers who are in a rush and likely already using their digital wallets for things such as transit tickets.
If you’re selling custom furniture with a higher upfront cost, choosing a Buy Now, Pay Later option, such as Affirm, could make your offerings more affordable for your customers without you having to lower your prices.
However, if you run a small-town diner that primarily serves regulars who have been frequenting your businesses for years, it may be a case of not fixing what isn’t broken. Alternative payment methods are a convenience, not a necessity.
If you do choose to go the alternate payment method route, it can be pretty easy. Third-party processors such as Square and Stripe both offer a wide range of integrations and developer support, as well as in-person credit card readers so that you can offer your customers more ways to pay.
Our Methodology For Picking The Best Alternative Payment Methods
In selecting the best alternative payment methods for small businesses, we researched 15 of the most popular alternative payment methods available, and selected the ones that performed best according to the following criteria:
Security: We selected only alternative payment methods that offered secure transactions for both merchants and customers.
Affordability: Cost was a major consideration in determining the best alternative payment methods, we elected options that wouldn’t break the bank for small businesses who are already paying for payment processing.
Popularity: Following the basic economic principle of supply and demand, we looked for alternative payment methods that are popular with consumers. The more popular an alternative payment method is, the more likely it is that your customers will use it.
Features: Some options on our list are more feature-rich than others, but each option offers the essentials needed to make paying more convenient for both your customers and your business.
Ease Of Use: Alternative payment methods should be easy to use because their primary function is to make paying as easy as possible for customers. However, we also believe that alternate payment methods should be easy to use on the merchant’s end, too.
Integrations: Alternative payment methods are meant to be supplemental in most cases, so we selected options based on how well they could integrate with a business’s existing payment processing solution.
The Bottom Line On Alternative Methods Of Payment
Alternative payments allow your customers to pay you on their terms and can eliminate any barriers to entry that are caused by limited checkout payment options. However, businesses may incur extra costs by implementing alternative payment methods, so it’s essential to choose a payment processor that suits your business model and offers alternative payment methods.
Do your due diligence, including estimating the cost of adding an alternative method of payment and surveying which alternative payment methods your customers are interested in. Fortunately, the best payment processors offer plenty of alternative payment method options and integrations, and won’t drive up your processing costs.
Otherwise, consider looking into one of the best mPOS software options, since they tend to have built-in alternative payment method options like Apple Pay and Google Pay. mPOS software can offer an easy way to accept a range of payment methods without any extra work.
FAQs: Alternate Payment Methods
What are the most popular alternative payment methods?
The most popular alternative payment methods include digital wallets, such as PayPal, Apple Pay, and Google Pay. Cryptocurrency, bank transfers, “Buy Now, Pay Later” options, and loyalty program payments are also among the most popular alternative payment methods.
What's the difference between alternative payment methods and preferred payment methods?
A preferred payment method is the default payment method a customer selects to be used when making a purchase, while an alternative payment method is any payment method that is not cash, credit, or debit.
Which is better Venmo or PayPal?
In general, PayPal is a better option than Venmo for payment processing and sending payments to friends and family.
PayPal is a more fully developed payment processing digital wallet solution than Venmo, while Venmo is designed primarily for taking small payments in person between friends and family members.
What are the best alternative payment methods for Shopify?
PayPal, the Shop Pay app by Shopify, Affirm, Apple Pay, Google Pay, and Amazon Pay are the best alternative payment methods available on Shopify.
Davina began writing for small businesses in 2018 and has since gained expertise in the SaaS industry. She earned her Bachelor’s of Arts in English Literature from SUNY Geneseo in 2018. She currently resides in New York.
View Davina Ward's professional experience on LinkedIn.
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