The Rise of Alternative Payments: Insights from Paramount Commerce’s COO
From pay-by-bank to mobile wallets, alternative payment methods are reshaping the way people and businesses conduct transactions. But what’s driving this change? And how can companies prepare for what’s next?
We sat down with Dave Roe, Chief Operating Officer at Paramount Commerce, to talk about the rising demand for alternative payments, how open banking will impact the space, and key trends to watch.
Q1: Why are alternative payment methods gaining popularity?
Dave Roe:
There are a few major factors behind this shift:
Changing consumer behavior: People want fast, secure, and seamless payments that match their lifestyle. pay-by-bank solutions such as Interac e-Transfer® have become more appealing, especially with younger generations.
Cost savings for merchants: Alternative payment methods often come with lower transaction fees than credit cards, helping businesses reduce costs.
Supportive regulations: Governments and regulators are encouraging alternatives to traditional card networks. This is helping newer methods gain traction globally.
Q2: What are the benefits and challenges for consumers and businesses?
Benefits for Consumers:
Improved security: Payments are routed directly through the consumer’s bank, reducing the need to share sensitive information with merchants.
Convenience: Transactions are often faster, with fewer steps compared to cards or digital wallets.
Benefits for Businesses:
Faster fund transfers: Alternative payments can settle more quickly, helping businesses access their money faster.
Lower fees: Reduced processing costs make these methods financially attractive.
Challenges:
Fragmentation: Unlike global card networks, alternative payment methods vary by region. Businesses must integrate with multiple systems, which can be complex.
Coverage gaps: Not all customers or regions support the same methods, making broad implementation tricky.
Q3: How is technology enabling the shift to alternative payments?
Dave Roe:
Technology is absolutely central to this evolution. A few key drivers include:
Mobile devices: Smartphones now act as secure payment tools, with built-in biometrics and intuitive interfaces.
Faster integrations: Tools like SDKs and APIs have made it easier for merchants to plug in new payment options.
Risk management: Machine learning helps monitor transactions in real time, preventing fraud while keeping user experiences smooth.
Q4: What impact will open banking have on payments in Canada?
Dave Roe:
Open banking will be a game-changer in Canada, just as it has been in Europe. Here’s what we expect:
More competition: Open APIs will lower the barriers to entry, allowing more fintechs to offer innovative payment services.
Better reliability: With standardized access to financial data, payments will become more secure, consistent, and transparent for everyone involved.
Faster innovation: Consumers will benefit from a wider range of payment choices and more personalized experiences.
Q5: What’s next for alternative payment methods?
Dave Roe:
The future looks strong and dynamic. Key trends we’re watching include:
Investment in real-time rails: Payment systems such as Interac e-Transfer® and other bank-to-bank networks are expanding, improving speed and reach.
Loyalty programs: Lower fees allow businesses to offer rewards similar to credit cards, without extra overhead.
Crypto and blockchain integration: Some alternative methods are blending with new technologies, offering even more ways to pay securely and efficiently.
In short, we’re entering an era of more choices, lower costs, and smarter systems.
Final Thoughts
Alternative payment methods are no longer fringe; they’re becoming mainstream. As open banking and new technologies mature, consumers and businesses alike will benefit from more secure, efficient, and flexible ways to pay.
Want to learn more? Talk to us to explore pay by bank solutions built for the future: https://www.paramountcommerce.com/contact
