Advertising Alternative Payment Services - Fraud Library

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Advertising alternative payment services are a completely new concept that have developed over the last 2 years that provide an interesting new revenue model for some merchants. In brief the advertising alternative payment option pays for a consumer's goods or services if they opt in to a marketing program. The marketing program could be a survey, to watch an advertisement or to signup for a newsletter. This is the first payment option that actually has incentive for both the consumer and merchant. For the consumer they can get free products or services and for the merchant they get paid the full value of their goods.

The transactional advertising service providers have shown rapid growth; as seen by the recent emergence of one of these service providers into the top 5 alternate service providers list. The explosive growth of this option as lead to several new companies that have entered this space.

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Advertising Alternative Payment Services

How Good is it?

In general advertising alternative payment services are considered to be safe and trusted as an alternative payment option. While this payment alternative is new it has already spurred growth and generated an enormous buzz on the blogosphere. Consumers have enjoyed receiving trial products for just trying a payment service, but there has been some backlash to trial products being over estimated in price. Consumers have said that many of the trial services are basic free versions for use.

Advertising alternative payment services have become a valuable resource to help motivate consumers' purchasing behavior. Due to the widespread adoption by consumers and merchants this should prove to become a contender among the other alternative payment heavyweights. This payment alternative is not suitable for all merchants but it has shown traction in a variety of niche markets such as gaming, software and subscription based services.

The possibility to increase sales, lower costs and partner with name-brand companies provides a favorable value proposition for this payment option.

Pros and cons of Advertising Alternative Payments include:

• Partner with name-brand companies and boost your brand association.

• Increased revenue (as the payout from an advertiser may exceed your regular price).

• Targeted marketing.

Considerations When Implementing or Buying This Functionality    

• How will the service appeal to my customers?

• Is the advertising alternative payment service susceptible to market fluctuations?

• Is the value added proposition suitable for my vertical market?

• How does the cost savings compare to other methods that are currently utilized?

• The long-term success of these advertising alternatives is unproven but they provide an interesting approach to increasing sales conversion.

Estimated Costs – Costs vary based on the vendor you select. The fees for these services are based on CPA charges related to successful advertising placements. While the cost of the trial products offered may be arguable, the value provided to merchants is obvious.

If you are in the market for new alternate payment options you should consider purchasing our Guide to Alternate Payment Options. A Guide to Alternative Payments is a prepared research document, 99 pages in length, intended to provide organizations an overview of the eCommerce alternative payment options and markets.  The Guide goes beyond a general market assessment to provide information businesses need to assess solution options and service providers.  The Guide also includes easy-to-understand reference tables on regional service providers (over 100 service providers), preferences and capabilities.

Alternative Solutions – Payment aggregators and credit cards are the most popular form of payment services. Cash payments, invoicing and credit terms are also viable alternatives. Google Checkout and Amazon Payments both offer a similar value proposition to advertising alternative payments offering advertising based incentives.

If you are in the market for new alternate payment options you should consider purchasing our Guide to Alternate Payment Options. A Guide to Alternative Payments is a prepared research document, 99 pages in length, intended to provide organizations an overview of the eCommerce alternative payment options and markets.  The Guide goes beyond a general market assessment to provide information businesses need to assess solution options and service providers.  The Guide also includes easy-to-understand reference tables on regional service providers (over 100 service providers), preferences and capabilities.

How Does it Work?  

You create an offer for consumers that you provide to the service provider for distribution. The service provider posts your offer on other merchants websites at the time of checkout. If the consumer selects the offer, you pay an advertising charge, and acquire a new customer. On your site you display offers from other merchants, if a consumer selects one of the offers, you get paid a fee. Essentially the consumer is getting the product for free or at a discount by opting into an offer from another merchant. The shopper then becomes a customer of both the advertiser and the merchant.

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