Alternative Payment Methods

1930sDepartment stores sell paper gift certificates²

1970sMcDonald’s introduces paper gift certificate books for holiday gifts³

1994Neiman Marcus sells first plastic gift card⁴

2011Digital eGift cards are introduced to consumers⁵

2016Starbucks introduces a reloadable gift card and ties it to a loyalty program⁶

2017Consumers name gift cards as their #1 most wanted gifts for the 11^th year in a row⁷

eGift cards can be purchased in-store, online or on a mobile device. Consumers choose an amount to deposit onto the card, and then provide an email address or phone number for the desired recipient.

Once payment is processed, a digital card loaded with the pre-paid balance is instantly delivered via text, email, social media, or within an app. It can be stored on a PC or mobile device, accessed at any time, and used for payment through any channels (in-store, online, over the phone).

Today, more and more consumers are starting to purchase digital pre-paid cards for themselves as a way to control their spending and collect merchant rewards.

To capitalize on this trend, numerous mobile apps are now available that enable consumers to purchase, send, store and manage their gift cards from a single location.

Checks Adapting to the Digital World: Key Facts

Checks started appearing in the U.S. in the 1600s. They are simply written notes that give an individual or commercial entity permission to access money from the payer’s bank account.

While the retail industry never fully embraced accepting checks due to the risk involved, for decades, checks were the standard for certain types of payments. Consumers wrote and mailed checks to pay their monthly bills.

Once the check is deposited into the recipient’s account, the banks handle transferring the payment. The process used to take 2-3 days. Today, with electronic transfers, it takes 24 hours.

While physical check writing is on the decline, consumers now have the option of making electronic check payments using the ACH (Automated Clearing House) network. As a result, many merchants and businesses are adding ACH as a payment option.

Merchant Benefits of Electronic Check Acceptance

• Gives customers another payment option
• Delivers higher profits through lower transaction fees
• Provides opportunity to reward customers for choosing the lower cost payment option

Mobile Wallets

The Introduction of Virtual Payments

Mobile wallets are apps that allow smartphone users to load and save payment data, including credit, debit and gift card information, in their phone’s storage system. Most mobile wallets can also store electronic boarding passes, loyalty cards, and event tickets.

2011Google introduces the first mobile wallet⁸

2014Apple launches Apple Pay⁹

2015Samsung Pay and Android Pay™ debut¹⁰

To accept mobile wallet payments, a merchant must purchase a contactless payments reader which uses Near Field Communications (NFC), similar to Bluetooth and Wi-Fi to connect to the consumer's phone. The consumer simply holds their phone a few centimeters from the reader to send payment information through for processing.

Most Popular U.S. Mobile Wallets

The Increasing Importance of Direct Personal Payments

Money exchanged electronically between two people is called a peer-to-peer (P2P) payment. Before P2P technology was introduced, when an individual needed to pay another individual, the only option was to give them cash, write a check, or wire funds through a service like Western Union.

• In 1998, PayPal was founded and became the first company to facilitate P2P payments.¹¹ The rise of eCommerce, particularly sites where individuals sell products to other individuals, helped spur PayPal’s growth.
• Today, multiple apps, including Venmo, Apple Pay Cash, and Google Pay, deliver P2P payments in short time frames with little to no fees.
• Once an individual sets up an account on a P2P app with their checking account and/or debit/credit card information, they can send funds to the recipient using their cell phone number or email address.
• Once the recipient accepts the payment, they have the option of storing it in a mobile wallet, or transferring it to their bank account.
• Some P2P apps also offer digital debit cards that store balances and can be used for payments.
• To compete, the major banks partnered to create Zelle^®. It allows bank customers to transfer cash directly from their account into another person’s account at any participating bank with no middleman.
• P2P payment services have also been built into social media platforms, like Facebook Messenger.