For a variety of reasons, some consumers prefer to use so-called alternative payment methods to buy goods online.
While making use of services such as PayPal, Bill Me Late and Google Checkout may not have been the first choice of consumers who prefer to use credit cards, a significant and growing number of shoppers are preferring to go the alternative payment route.
According to a Multichannel Merchant report from the eTail 2009 conference, Bruce Wolansky, vice president of global e-commerce for Orvis, felt "almost embarrassed to slap a Bill Me Later logo" on his company's site back in 2005. That discomfort turned out to be short-lived as Mr. Wolansky found consumers responded to having another choice they could use to purchase goods. In fact, according to Mr. Wolansky, the average credit card consumer spends $150 on Orvis.com while Bill Me Later users spend $175.
Tim Engel, vice president of strategic initiatives for JTV.com, told eTail attendees that between 15 and 30 percent of the online jeweler's sales are made with a form of payment other than credit cards.
Julie Katruska, director of finance for AEO Direct, said she only saw one drawback to using alternative payments. The company cannot take PayPal returns in its stores. "We can offer the customer cash back or a store credit," she was quoted by Multichannel Merchant. "But we can't process a return in-store with an alternative payment."
Discussion Questions: What do you see as the biggest factors behind the growth in alternative payments online? What are the pluses and minuses for merchants associated with the use of alternative payment options? Will we see the use of these alternative payments migrate to brick and mortar locations?