In the past three years, alternative payments have gained considerable market value with no loss of momentum in sight.

Alternative payments currently account for roughly 15 percent of total e-commerce volume. However, by offering a superior value proposition to buyers, alternative payments pose a threat to traditional payment methods.  This, according to a new report from Celent, LLC promoting  their  assessment that the strongest value is derived from the creation of sales lift.  


Editor's Note: You think?  The trick lies within creating an innovative way to do so. It is my strong contention that the Live Search CashBack program recently introduced by Microsoft has the potential to be sculpted into a true alternative payments masterpiece.  Here's a little backgrounder for those unfamiliar with the program...

Reward your Customers with cashback on Purchases

Live Search cashback is a new program that combines the power of Live Search with a comparison-shopping engine to bring consumers some of the best deals on the Web. The program rewards consumers with a cash back rebate for a purchase, and gives advertisers the opportunity to sell on a cost-per-acquisition (CPA) basis.

Both Microsoft and it's Online Retail Participants are providing consumers with a "cashback" loyalty program.  But what's missing is a way to provide participating online retailers with a cashback program of their own.  (to help offset the costs.)   I believe HomeATM's PIN Debit Solution  when properly placed can emerge as the missing piece to this puzzle.

HomeATM significantly reduces the cost of processing web based transactions conducted via the CashBack platform.   By simply providing a "SwipePIN" device to consumers who sign-up for the Cashback program, MS would be "enabling" them to purchase using their PIN's. (thereby significantly reducing the cost of the transaction)  Those savings, in turn, offset some of the costs of the cashback program.  It's perfect harmony. Microsoft provides cashback to consumers and HomeATM provides cashback (in the form of a significant reduction in processing costs) to Internet Retailers. 

So how do we get consumers to start swiping and entering their PIN numbers?   Offer them the SwipePIN device FREE...as a reward for signing up.  (we could charge them $2.95 shipping to offset some of our costs) 

MS creates further incentive to get consumers to participate by offering higher "cashback" percentages to those who utilize HomeATM's more secure SwipePIN device.  Think of it as a "platinum" vs. a "gold" rewards platform.  Platinum rewards go to those who use the "SwipePIN" device. 

The consumer wins because it's a more secure transaction, the Internet Retailer wins because they can save up to 100 basis points, Microsoft wins because it drives participation and, of course, HomeATM would benefit mightily as well.  More on all of this later... I just got going because I happen to agree that an alternative payment differentiation that provides an advantage over others is an alternative payment that creates a sales lift.

Back to the article:

In less than a decade, alternative payments have evolved from "dot bomb" burnouts to widely accepted, widely recognized forms of online payment, Celent notes.

• Enablers offer a technological "wrap around" for payment cards that lead to increased card volume when cards are used as the source of funds, Celent found. 
  
• Quasi-disruptors are players that allow for both cards and other funds sources (e.g., bank accounts) to be used. Should bank accounts be used instead, these same players take on disruptive qualities
• Disruptors are solutions in which the card industry plays no role whatsoever.

However, the outlook is not entirely rosy for alternative payments. "Alternative payments players have already become commodities in terms of security, convenience and pricing.

The real differentiator is their ability to induce purchases and affect a corresponding sales lift. 

"The greatest threat to the card industry is a disruptive alternative payments solution that has figured out how to increase online merchants' sales."  "The spoils will go to those players who understand that their role is no longer simply making shoppers able to pay. Instead, such players realize that, going forward, they must make shoppers want to pay," he adds.

SOURCE: Celent, LLC