The Best Alternative Payment Methods For Small Businesses

PayPal earned the top spot as the best alternative payment method because its popularity, convenience, versatility, and feature set cannot be beaten. When you compare PayPal’s functionality to some of the other alternate payment methods, such as Click To Pay or Affirm, PayPal vastly outperforms the competition.

Merchants can sign up for a free PayPal business account to gain access to PayPal’s extensive eCommerce software suite, including integration options that can bring PayPal to your brick-and-mortar POS or online store as an alternative payment option.

PayPal’s reach is extensive, with millions of users across the US and millions more internationally. As PayPal serves as a digital wallet, P2P payments facilitator, and offers a convenient contactless payment option, its versatility makes it a valuable solution for businesses and their customers alike.

If you are using PayPal as a supplemental payment option, then you may have to pay additional fees depending on the payment processor or POS system you currently use. Additionally, you may have to pay PayPal’s processing fees, which come in at 3.49% + $0.49 when using PayPal’s digital payment methods.

PayPal also offers paid plans that start at $5/month for those businesses that want more advanced payments management.

PayPal’s features are extensive, as the company boasts software and services that span the payment processing and eCommerce market. However, we’ll be focusing on PayPal’s features as an alternative payment method. So, here’s a look at PayPal’s features:

• Smart payment buttons that change based on the transaction’s contextual details
• Additional security with customers signing into their PayPal account before payment
• Tons of integrations with in-person POS and eCommerce software
• Extensive developer tools for businesses with online shops
• Support for multiple payment types and multiple currencies, including Apple Pay, Bitcoin, Venmo, and more
• Supports near field communication (NFC) technology for contactless payments
• Built-in PCI compliance at no extra cost with PayPal Checkout
• Completely free business account option with no monthly or hidden fees
• Instant transfer options for fast payouts
• Ability to use PayPal for nonprofits with donation-specific tools

We chose Venmo as one of the alternative payment options because we think that Venmo works especially well for those businesses providing in-person services, such as photography, makeup application, or barber services. These businesses tend to start off as side hustles with friends and family serving as first customers, so Venmo payments work exceptionally well here.

Venmo is exceptionally simple to set up, and if you already have a personal Venmo account, you can simply add a business profile to your account in a few clicks. Venmo can also be added as an option to an existing Braintree or PayPal account for online purchases, though you’ll end up paying higher processing fees.

However, we don’t recommend Venmo for more established businesses or those accepting primarily online payments, due to Venmo’s transaction limits, higher fees for online payments, and no support for sales tax.

Venmo’s payment processing fees are 1.9% + $0.10 per transaction using the Venmo app or a Venmo QR code. Online payments using Venmo have a higher processing cost at 3.49% + $0.49 per transaction. Additionally, you may be required to upgrade your account with your current processor to begin accepting Venmo payments.

Compared to the other options on this list, Venmo’s features as an alternative payment method are very limited for merchants. However, Venmo can easily handle payment acceptance in person, offers some customization options, and even offers tipping. Here’s a more in-depth look at Venmo’s features:

• Simple sign-up for existing and new Venmo users
• Optional QR payment acceptance
• Accept online payments with Venmo through PayPal or Braintree
• Contactless payments and quick payments via mobile phone
• Option to turn on tipping
• Free, customizable business profile to show off your brand
• Payments to your business may show up in your customer’s feed as free marketing to their friends
• Predictable processing costs

We chose Square Cash App for business as one of the best alternative payment methods because it offers an accessible and convenient alternative payment method for businesses that are already within the Square ecosystem.

Cash App for businesses lacks the robust feature set that is usually expected of Square, but serves its purpose well enough. If you use Square Cash to accept payments from customers, you’ll make it easy for them to pay your business from their Cash App digital wallet or Cash balance.

The Square Cash App includes notable processing limits, which means merchants who process lots of high-ticket transactions should consider other alternative payment solutions. Since Square Cash’s support team is separate from Square’s standard support, this app is also poorly suited to merchants new to setting up and using alternative payment methods for their customers.

Sending cash for personal use is free with Square Cash, although merchants pay a 2.75% fee per transaction and a 1.25% (min. $0.25) fee on instant deposits sent to their bank accounts.

Square Cash App’s features are limited for merchants, but make it easy to accept and manage customer payments. You’ll be able to offer Square Cash App as an online and in-person payment option (provided you already use Square and have compatible hardware or software). Here’s a look at Square Cash App’s features as an alternative payment method for businesses:

• Credit and debit card payment acceptance
• Verified business accounts can accept an unlimited number of payments
• Allow customers to pay via QR code or payment link
• Create custom cash tags to bolster your business’s brand
• Accept Square Cash App payments without a Square Cash App account via Square’s hardware or software
• Leave notes on transactions to track purchases from within the app
• Fundraise with Square by accepting payments via Cash App

We chose Zelle as one of the best alternative payment methods because it offers free and fast bank transfers, even for business-to-business (B2B) transactions. We think it’s a great option for start-up businesses that need to quickly process low-volume payments or eCommerce businesses that are looking to keep payment processing costs as low as possible.

However, Zelle does have some limitations. Merchants can’t receive any funds sent from a debit or credit card to their Zelle account, which makes Zelle a less-than-perfect option for very small businesses and micro-merchants that thrive off individual, repeat customers.

If you’re running a business that mainly relies on credit cards for payments, this isn’t the app for you. Consider alternatives like Venmo, which lets merchants send, receive, and request funds using credit cards.

Zelle is completely free for business use and doesn’t charge a single fee. In rare cases, your bank may charge fees, but those won’t be coming from Zelle.

There is some concern that Zelle will eventually begin charging for its services, but that has yet to come to fruition.

Zelle offers fast and reliable bank transfers for both businesses and customers alike. However, like many of the alternative payment options on this list, it’s limited and should only be used as a supplemental payment option. Here’s a breakdown of Zelle’s features:

• Receive funds from completed transactions almost immediately
• Send and request payments via Zelle mobile app, supporting bank apps, email, or phone number
• FDIC-insured transactions
• Business accounts are supported by many popular US banks, including BofA, Citi Bank, USAA, Capital One, and more
• Contactless payment support

We chose Apple Pay as one of the best alternative payment methods because it is one of the most feature-rich digital wallets on the market and is natively built into the Apple ecosystem.

As Apple Pay serves as a means to store card information, transit tickets, event passes, coupons, and a cash balance, accepting Apple Pay allows merchants to provide customers with many different payment options without too much hassle.

As for popularity, it’s hard to beat Apple, especially in the US market. Apple Pay is built into Apple devices, allowing customers to use it from compatible iPads, iPhones, Apple Watches, and Macs.

We’re not going to get into the Apple vs. Google debate here. When it comes down to it, both Google Pay and Apple Wallet offer virtually the exact same services and features, with the biggest difference being their native operating systems.

Apple does not charge merchants any fees to use Apple Pay, however, merchants using Apple Pay will be on the hook for their payment processor’s fees depending on whether the transaction utilizes a debit or credit card.

As one of the most popular digital wallets in the world, Apple Pay offers a comprehensive feature set for both businesses and their customers. Here’s a look at what Apple Pay can do:

• Top-notch security features, including tokenization
• Contactless payments support
• Supported by major payment processors, including Square, Stripe, PayPal (via integration) and more
• Integrate with accounting software via your payment processor to easily track Apple Pay transactions
• Accept payments with your iPhone using a compatible mPOS app

We chose Google Pay as one of the best alternative payment methods for small businesses because of its extensive global reach, robust functionality as a digital wallet, and excellent security features.

Google Pay, similar to a full-featured digital wallet, allows customers to store their credit cards, debit cards, cash, and loyalty cards in one place. It’s especially useful across the web, providing users with easy access to their payment methods during eCommerce transactions.

Google Pay really stands out as a secure solution. Google Pay safely stores card information which it encrypts using tokenization technology. Merchants who use Google Pay don’t need to worry about storing customer card info on their own system and can reduce the risk of fraudulent charges and chargeback claims.

Similar to Apple Pay, Google Pay is free to use for merchants and requires an NFC card reader.

Google Pay doesn’t charge merchants any fees to use, but merchants are still required to pay the processing fees charged by their payment processor.

Google Pay’s functionality as a digital wallet allows customers to easily make purchases online and in-person, using their Android device or Google account online.

Here’s a look at all the things Google Pay can do as an alternative payment method:

• Allow customers to store and manage multiple payment methods, including debit and credit cards
• Solid security features, including tokenization
• Google Pay API and Google Pay website button options
• Free Google Pay acceptance stickers
• Make online checkout faster with Google Pay’s payment Autofill features
• Google Pay is supported by multiple payment processors, including Chase Merchant Services, Stripe, Square, Helcim, and more

We chose ACH as one of the best alternative payment methods because we believe it offers solid versatility for merchants who rely on subscription products and services, recurring online payments, eCommerce payment options, and electronic invoicing.

ACH/eCheck payments are also great for merchants who conduct business largely online and want to avoid credit card interchange fees.

ACH and eCheck payments offer convenience but fall short when it comes to speed. These payments are slow compared to other payment types since they need to travel from one point across the ACH network to another.

Merchants also need to verify that their payment service provider offers ACH options in the first place since ACH/eCheck payments are less prevalent than traditional credit card payments.

Costs to start using ACH/eCheck payments vary depending on your ACH payment provider; certain processing companies impose relatively high per-transaction fees, while others charge low per-transaction fees but high monthly fees.

ACH payment acceptance is relatively simple.

• ACH payments are relatively secure
• Support for payment automation and recurring payments
• Relatively lower fees than traditional credit card processing and paper check deposits
• Same-day processing options
• Many banks don’t limit ACH processing for businesses
• ACH payment processing is supported by major payment processors, including Stripe, Square, PaymentCloud, National Processing, and Host Merchant Services

We chose Affirm as one of the best alternative payment options because it’s the best Buy Now, Pay Later service provider on the market.

When customers choose to use Affirm, they are signing up for a short-term loan that is handled by Affirm. You receive the full cost of the transaction upfront, minus your transaction fees.

Affirm provides your customers with more spending power and reduces the upfront costs they pay for larger purchases.

While Affirm charges merchants a high per transaction fee, there’s no doubt that Affirm’s services could result in a significant increase in sales — which is a more than fair trade-off.

Affirm integrates with payment processors and eCommerce platforms, such as Shopify, Stripe, BigCommerce, WooCommerce, Magento, Lightspeed, and many more.

Affirm charges merchants a merchant discount rate (MDR) and a transaction fee, which varies based on your business’s size, assessed risk profile, and the Affirm program you choose.

Affirm states that its typical fee is 5.99% + $0.30 per transaction.

Affirm offers basic features for merchants, but this helps to keep things simple. Here’s a look at Affirm’s best features:

• Merchants can control loan terms and minimum qualifying spend
• Customer eligibility is limited to being 18 years old, having an SSN, and having a US phone number with SMS capabilities
• Affirm integrates with top payment processors and eCommerce platforms
• Affirm only performs a soft credit check for customers, so it won’t hurt their credit
• Affirm can be used in-store and online
• No late fees for customers