Is your alternative payment method market-ready?

<p><b>The market for alternative payment methods is profitable—but it’s also crowded. Here’s how to make sure your payment innovation is a standout before you launch it.</b></p>

<p>Alternative payment methods (APMs) have entered an explosive new growth phase. According to some estimates, digital alternatives&nbsp;to cash and credit/debit cards <a href="https://www.juniperresearch.com/press/pressreleasesglobal-ecommerce-market-poised-to-reach-11tn-by-2029/" target="_blank" rel="noopener noreferrer">are projected to account for 69%</a> of e-commerce transactions by 2029.</p> <p>Consumers have taken notice. In the US,<a href="https://capitaloneshopping.com/research/most-popular-online-payment-methods/" target="_blank" rel="noopener noreferrer"> 65% of adults</a> use digital wallets at least once a month, and <a href="https://coinlaw.io/buy-now-pay-later-statistics/" target="_blank" rel="noopener noreferrer">49%</a>&nbsp;have tried buy-now-pay-later (BNPL) services. Younger consumers are driving much of the growth: 37% of Gen Z and 31% of millennials <a href="https://www.nmi.com/blog/nmi-survey-what-consumers-want-from-payments-in-2025/" target="_blank" rel="noopener noreferrer">said they’d use</a> digital wallets for most transactions this year, according to payments provider NMI, while J.D. Power <a href="https://www.jdpower.com/business/press-releases/2025-us-buy-now-pay-later-satisfaction-study" target="_blank" rel="noopener noreferrer">found that 42% of Gen Y and Z consumers</a> already use BNPL.</p> <p>Merchants are just as enthusiastic. Ninety-one percent said offering new payment methods attracts new customers, <a href="https://corporate.freedompay.com/resources/white-papers/the-value-of-choices-in-payment-options?utm\_source=website\&amp;utm\_medium=pr\&amp;utm\_campaign=2024-09-RetailDive-PR\&amp;utm\_content=the-value-of-choices-in-payment-options" target="_blank" rel="noopener noreferrer">according to FreedomPay.</a> Sixty-two percent saw a positive impact on sales, costs and customer numbers within a single month.</p> <p>Amid all this activity, payments providers face&nbsp;an increasingly crowded and high-stakes marketplace. BNPL leader Klarna <a href="https://www.wsj.com/finance/klarna-ipo-nyse-klar-stock-4209012b" target="_blank" rel="noopener noreferrer">is working to rebrand itself</a> as a full-fledged bank and recently launched products in the US, including a Visa debit card. What’s more, traditional banks are increasingly entering the APM space. Saudi Arabia's central bank <a href="https://timesofindia.indiatimes.com/world/middle-east/saudi-arabia-central-bank-launches-google-pay-and-announces-alipay-acceptance-by-2026/articleshow/123916600.cms" target="_blank" rel="noopener noreferrer">launched Google Pay</a> and announced plans for Alipay+ acceptance by 2026, reflecting a strategic move to enhance digital payment options.</p> <p>The real challenge for banks, fintechs and payments providers isn’t designing and launching a payment innovation but evaluating whether it can thrive in a crowded marketplace.</p> <h4>Ensuring the readiness of your alternative payment method</h4> <p>We use a five-step framework when guiding our clients&nbsp;to evaluate their payment innovation before it launches. By using this approach, dubbed CRAVE, payments providers can ensure they deliver what customers truly want in five key areas:</p> <ul> <li><b>Convenience: Is the user experience truly frictionless?<br> </b>Convenience is the foundation of any successful APM. It refers to how easily users can interact with the payment method—from completing transactions to resolving issues.<br> <br> A frictionless experience means that users can navigate the interface intuitively and receive instant confirmations with clear security indicators. Think of Apple Pay, which rose to market dominance by bringing secure, tap-to-pay convenience to shopping. Or WeChat Pay, which folds payments into a broader social and commerce super app.<br> <br> Ease of use builds trust and encourages repeat usage. In today’s digital landscape, poor user experience isn’t just a design flaw—it’s a barrier to adoption and growth.<br> <br> </li> <li><b>Reach: Can it scale across markets and segments?<br> </b>Alternative payment methods need to operate across diverse environments—technological, geographical and demographic. A scalable APM should support multiple currencies, languages and regulatory frameworks, making it usable across countries and platforms. It must also integrate seamlessly with existing merchant systems and point-of-sale terminals. Importantly, it should cater to both digitally-native users and those less familiar with technology, ensuring inclusivity and broad market penetration.<br> <br> In Europe, Wero’s success—<a href="https://www.finextra.com/newsarticle/45890/epi-looks-to-join-forces-with-other-payment-schemes-to-secure-eu-sovereignty-in-payments" style="background-color: rgb(255,255,255);" target="_blank" rel="noopener noreferrer">40 million users</a> within nine months of rollout—underscores the desire for a single digital wallet spanning multiple countries.<br> <br> </li> <li><b>Adoption: Are users and merchants onboarding quickly?<br> </b>When piloting or soft-launching their APM, payments providers should closely monitor the velocity with which users and merchants sign up for and begin engaging with the payment system. Early signs of success include high rates of repeat transactions, positive merchant feedback and ease of integration with partner systems.<br> <br> APMs that demonstrate quick traction in pilot programs or soft launches are more likely to succeed at scale, as are those that act quickly to address feedback, both negative and positive.<br> <br> </li> <li><b>Volume: Does it drive business impact?<br> </b>Alternative payment methods need to contribute to business outcomes through both volume—and value—of transactions. In addition to facilitating payments, the APM also needs to enhance revenue by increasing average transaction values and reducing cart abandonment. It should offer compelling benefits such as loyalty rewards, installment options or transparent fee structures that appeal to both consumers and merchants.<br> <br> Organic growth in transaction volume is a strong indicator of user satisfaction and market demand. When an APM delivers measurable financial impact, it becomes a strategic revenue-generating asset rather than just a payment tool.<br> <br> </li> <li><b>Efficiency: Is it stable, scalable and secure?<br> </b>Lastly, the payment innovation needs to demonstrate strong back-end performance and operational resilience. It must process transactions reliably and in real time, even during peak periods like holiday sales. The infrastructure should be robust to prevent and mitigate fraud, handle chargebacks and prevent data breaches, with strong, geo-specific compliance adherence and reporting mechanisms in place.<br> <br> Efficient dispute resolution and responsive customer support are also essential. India’s UPI reveals how real-time bank-to-bank transfers can become the backbone of an entire nation’s payments system. APMs that can scale without compromising performance or security are better equipped to handle growth and enhance user acceptance and trust over time.</li> </ul> <h4>Achieving market success with a new alternative payment method</h4> <p>The alternative payment methods market is moving fast and looks set to expand further, offering even greater payment optionality in the comingyears. APMs that successfully balance these five criteria hit the sweet spot between traditional payment methods and breakthrough innovations.</p> <p>In a crowded marketplace, providers can leverage the CRAVE framework to differentiate their value proposition, launch APMs that gain adoption and scale, and build the trust needed for long-term success.<br> <i>&nbsp;</i></p>