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Alternative Payment Methods Becoming Synonymous with Single Industries

 

Payment services such as Visa, Mastercard, and PayPal have become established as many people’s preferred choices because of their sheer ubiquity, both in terms of the countries in which they work and the industries that they serve. While some consumers may be comfortable paying by credit or debit card at all times, others have sought alternative solutions that provide greater flexibility.

While Visa, Mastercard, and PayPal are geared to serving as many businesses as possible, new alternative payment methods have tailored their services to work more effectively in just a handful of industries. By focusing services on a more niche demographic, these newer payment methods have been able to advertise themselves as viable alternatives to the status quo of credit and debit card transactions.

Here is a look at three alternative payment methods that enjoy significant popularity in certain industries.

Klarna – E-Commerce

Consumers rely on online shopping transactions more than ever before, with a large percentage of people preferring digital storefronts rather than their physical counterparts. It’s no surprise to see that an emerging payment method has been developed with more than just speed and security in mind. Klarna advertises itself as a company that makes online shopping simple, with this service giving consumers greater flexibility about how they pay. Founded in Sweden in 2005, Klarna became the EU’s most valuable private fintech in 2019 when it reached a worth of $10.6 billion in September 2020.

Klarna allows consumers to pay for items in full 30 days later, or to spread out the cost of the transaction into three monthly payments. This flexibility has tempted a high proportion of online shoppers away from Visa and Mastercard, and towards Klarna. In the first half of 2020, Klarna added over 35,000 retailers to its network, taking its overall figure above the 200,000 mark. During the same period, the number of American users of Klarna increased by 550% compared to the equivalent part of 2019. Given that it has been successfully integrated at huge global retailers like ASOS, Klarna doesn’t appear to be a passing fad.

Neteller – Entertainment

While Neteller also enjoys a strong presence in the world of foreign exchange trading, this payment method is most commonly associated with the online casino sector of the entertainment industry. Neteller has been serving its users for over two decades; the service was created in Canada in 1999, and the company quickly positioned itself as a leading facilitator of iGaming transactions. Neteller remains in that position, featuring alongside Visa and PayPal as one of the primary payment methods at Betway Casino. It’s no surprise that online casinos give Neteller such prominence, as members need to be able to deposit and withdraw funds in a swift and secure fashion.

With a prepaid Mastercard function and a specialist Neteller e-wallet, users have a range of options on how to manage their funds. The e-wallet is an attractive option to casino users, as it enables them to create a pot of money that exists in isolation from their main bank account. This assists with bankroll management for online casino players. In 2005, Neteller earned 85% of its annual revenues from online gambling money transfer. Fifteen years later, Neteller remains one of the most trusted payment options in the iGaming industry.

Trustly – Banking

IMAGE SOURCE: Pixabay.com

Despite boasting a population of just over 10 million, Sweden has had a massive impact on a variety of industries all over the world. This could be a product of Sweden’s status as one of the highest-income countries. The country is known as a ‘unicorn factory’ because of the large volume of successful startups to emerge from its borders, with companies like Spotify, Skype, and Klarna sharing a Swedish heritage. Trustly is another Swedish unicorn that has roamed the earth, with this Stockholm-based fintech starting in 2008 with the aim of facilitating fast global transactions.

While Trustly can be used at e-commerce and entertainment platforms, its reputation is mostly a result of its emergence as a rival to bank transfers. Bank transfers can be unwieldy to set up and slow to process, particularly when transactions cross borders. Trustly aims to make this process easier, through integration at over 6000 banks across 29 European nations and the United States. The company now processes over 9 million payments each month, a testament to how Trustly has become one of the foremost options for bank-to-bank transactions.

The value of focusing on one industry

PayPal has demonstrated that an entirely digital service can thrive, with the company becoming an online money giant with an international presence in several industries. PayPal’s desire to be a ‘jack of all trades, master of none’ may be its undoing, as that always places it in direct competition with debit and credit card options. Taking a more niche approach may be a wiser strategy for some alternative payment methods.

Rather than trying to become a person’s default payment method in all aspects of their digital life, Klarna, Neteller, and Trustly have become associated with specific industries. One consumer may use Klarna for their e-commerce, Neteller as their entertainment e-wallet, and Trustly as their means of completing bank transfers. By targeting a smaller area of the digital payments industry, these companies have been able to thrive.