Online shoppers in the U.S. overwhelmingly prefer to pay for their purchases by credit card. Foreign shoppers, however, often use other methods because credit cards are not as readily available and widely used in other countries. But credit cards aside, there are several other alternate payment methods that are safe, efficient and easy to use. Usage and processing costs for many of these alternative methods are often inexpensive. The more consumers become familiar with these ways to pay, the more widely used they will become.
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While credit card payment and PayPal are the dominant methods of paying online, the alternate methods are gaining popularity as online shopping increases worldwide. Here are some of the other ways to pay.
PayPal is an e-commerce payment processing company owned by eBay. Users set up a PayPal account and pay a fee for each cash transaction. Rules and fees vary for currencies used and cash amounts transacted. The PayPal website has an easy, step-by-step sign on process. Rules are spelled out in detail. Users can pay from their PayPal account. (For related reading, see 8 Secrets For Selling On The New eBay.)
Bill Me Later
"Bill me later" is a way to use PayPal and pay without a credit card. Users provide their birthday, the last four digits of their Social Security number and agree to accept the contract terms. Once this process is concluded, the purchase is made. The bill is sent later. Users are subject to a credit check before being approved.
Debit card, alternately called a bank card or check card, is a way to pay directly that draws cash for a purchase directly from a bank account and transferring to an account held by the seller. Most online merchants will accept debit card purchases.
The bank transfer is similar to the debit card method – it's a method of transferring cash from one bank account to another account. The debit card in a bank transfer transaction is not necessary, although the results are the same. The bank transfer method provides security and speed, and is widely used in Europe, but is also available in the U.S.
Online Banking ePayments (OBeP)
Users of this method are directed at the time of purchase to the merchant's online bank website. The buyer logs in and authorizes the charges. Funds are transferred from the buyer's bank to the seller's bank. Highly secure, buyers using this payment method do not have to provide their account numbers or other personal data.
Electronic Bill Payment
Electronic bill payment is another method of sending money to a seller's or creditor's bank account directly from an existing bank account. This method is also used to pay credit card or other bills, and not necessarily to merchants.
The mobile payment option is relatively new, and gaining popularity in foreign countries. Using a mobile phone, consumers can pay for a variety of goods and services, with the charges assigned to their phone bills. This method eliminates the use of checks, credit cards and other pay methods. Multiple charges are consolidated in one monthly statement – the phone bill.
The electronic check is a method of payment which draws cash from a checking account, eliminating the paper check and the inconvenience of mailing it. The electronic check, or the ACH or eCheck, as it's sometimes called, requires the payer's name, amount of payment, routing and account number. The user authorizes the transfer of funds from his or her bank website to the payee.
The Bottom Line
As the internet becomes increasingly more popular for almost every variety of consumer cash transactions – buying, selling, banking, paying and collecting debts – the alternate methods of payment cited above will become more widely used. Offering convenience, speed and security, some of these currently alternate payment methods could soon become the preferred methods. (For related reading, see Shopping Online: Convenience, Bargains And A Few Scams.)
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