Cardflo for Businesses needing APMs.
Businesses operating in high-risk sectors often require a diverse range of payment acceptance methods to meet customer preferences and regulatory demands.
Cardflo provides access to various alternative payment methods (APMs), enabling merchants to broaden their reach and improve conversion rates by offering relevant payment options to their customer base.
- Industry
- Businesses needing APMs
- Category
- High-risk
- Cardflo support
- Yes
The overview
Alternative Payment Methods (APMs) constitute any form of payment that does not involve a major credit card scheme like Visa or Mastercard. For merchants in high-risk categories, APMs are often a structural requirement rather than a preference.
These businesses frequently encounter volatility with domestic acquirers, leading to a reliance on bank transfers, digital wallets, and regional payment schemes to maintain operational continuity.
APMs sit alongside traditional gateways in the payment stack, typically integrated via a single API to allow the merchant to toggle specific methods based on the customer’s geographic location or local currency.
By diversifying the available payment options, merchants can mitigate the risk of account closures or sudden declines in scheme card authorisation rates.
This ecosystem includes domestic debit schemes, buy-now-pay-later (BNPL) services, and real-time bank transfers, which often carry lower interchange costs and reduced chargeback risk compared to traditional credit card transactions.
How it works
Method mapping and selection
The merchant identifies the specific APMs required for their target markets, such as iDEAL in the Netherlands or Pix in Brazil.
The payment service provider enables these specific rails within the gateway settings, ensuring that the checkout interface dynamically presents the correct options based on the user's IP address or billing history.
Transaction request and redirection
When a customer selects an APM, the gateway sends an authorisation request to the specific provider.
Most APMs require a redirect to the provider’s own secure environment or a mobile application to authorise the transaction, fulfilling Strong Customer Authentication (SCA) requirements through biometric or secondary factor verification by the user.
Real-time payment confirmation
Once the customer completes the transaction within the APM environment, the provider sends a real-time notification back to the gateway.
For push-based payments like bank transfers, this confirmation indicates that funds are being moved, allowing the merchant to fulfil the order with certainty that the payment cannot be easily reversed.
Clearing and local settlement
The APM provider aggregates the authorised funds and settles them to the merchant's account.
This process may involve currency conversion if the transaction was processed in a local currency but requires settlement in a different base currency, often guided by the specific terms of the merchant's service provider agreement.
Why it matters
Mitigating scheme dependency risks
High-risk merchants are often vulnerable to sudden changes in scheme rules or acquirer risk appetite. By integrating multiple APMs, a business ensures that its entire revenue stream is not dependent on a single channel.
If card authorisation rates drop due to issuer caution within a specific sector, bank-to-bank transfers or digital wallets provide a stable alternative for transaction processing.
Expanding geographic market reach
Global payment preferences are highly fragmented. In many emerging markets, credit card penetration remains low, while mobile wallets or domestic bank transfer schemes dominate the landscape.
Merchants prioritising these methods can access customer segments that would otherwise be unreachable, significantly increasing the total addressable market without requiring a physical presence in every jurisdiction.
Lowering operational chargeback ratios
Many APMs are categorised as push payments, meaning the customer must manually authorise the transfer of funds. This mechanic significantly reduces the likelihood of 'friendly fraud' and traditional chargebacks common with card payments.
For high-risk entities struggling with high dispute rates, shifting volume toward irrevocable payment methods helps maintain a healthier overall merchant account standing.
Regulatory notes
PSD2 and SCA Compliance
Under the Revised Payment Services Directive (PSD2) in Europe, most electronic payments require Strong Customer Authentication. APMs often meet these legal requirements by design, as they involve multi-factor authentication within the banking or wallet environment.
Higher-risk merchants must ensure their APM integrations correctly pass the required data to confirm SCA compliance to avoid transaction refusals by the issuer or provider.
Regional Licensing Requirements
Merchants utilising APMs must adhere to both global AML/KYC standards and specific local regulations. For example, certain regional methods in the Middle East or Asia may require the merchant to have a local legal entity or a specific licence to accept payments.
Furthermore, high-risk sectors such as gaming or financial services are subject to additional scrutiny by APM providers to ensure the underlying business activity is authorised in the jurisdiction where the payer resides.
Use cases
Online Gaming and Wagering
Operators prioritise digital wallets and instant bank transfers to ensure rapid deposits and withdrawals, adhering to regional licensing requirements and satisfying player demand for immediate liquidity.
Subscription and SaaS Providers
Businesses specialising in recurring revenue often utilise direct debit APMs to minimise involuntary churn caused by expired or lost credit cards, stabilising long-term merchant processing volumes.
Cross-border E-commerce
Retailers selling into regions with low card usage, such as Southeast Asia, implement local QR-code based payments and mobile wallets to capture local demand and improve conversion.
High-Ticket Service Providers
Merchants dealing in high-value transactions utilise bank-to-bank APMs to avoid the high interchange fees and percentage-based costs associated with premium credit card rewards programmes.
By the numbers
Typical increase observed by merchants who localise payment options in non-card dominant regions, according to broad industry benchmarks.
The potential saving on processing fees when migrating volume from high-interchange credit cards to domestic bank transfer schemes.
The growth rate of mobile-first payment methods in emerging markets compared to traditional banking products over the last five years.
Related terms
Book a scoping call to see how Cardflo would set you up.
What's included.
- Support for regional bank transfer schemes to increase local market penetration and conversion.
- Integrated digital wallet functionality to facilitate rapid, secure checkout experiences for mobile users.
- Direct debit capabilities for managing recurring subscription billing and reducing involuntary payment churn.
- Access to prepaid card networks frequently used by unbanked or underbanked consumer segments.
- Reduction in transaction costs by bypassing traditional credit card interchange and scheme fees.
- Enhanced fraud protection melalui non-reversible push payment mechanics inherent in many APM structures.
- Consolidated reporting interfaces that aggregate data across various payment methods for easier reconciliation.
- Dynamic checkout routing to display relevant payment options based on the customer's geographic location.
- Simplified compliance management by utilising the APM provider's built-in Strong Customer Authentication protocols.
- Scalable integration via a single API to add or remove payment methods as requirements evolve.
Talk to an acquiring specialist about your MID setup.
Common questions.
Do all alternative payment methods provide protection against chargebacks?
Not all APMs are exempt from disputes, but many bank-to-bank transfers and 'push' payments are functionally irrevocable once authorised. Unlike card schemes, which have mature dispute frameworks like the Visa Resolve Online system, many APMs do not have a formal chargeback process.
This makes them attractive for high-risk merchants. However, some digital wallets and BNPL services still allow users to log complaints or seek refunds, so it is vital to analyse the specific terms of each provider before integration.
How does adding APMs affect my PCI-DSS compliance requirements?
Integrating APMs can actually reduce the merchant's PCI-DSS burden. Since many APMs rely on redirecting the customer to a third-party portal or using tokenised data, the merchant often avoids handling sensitive cardholder data directly.
By using a hosted checkout page or a secure redirect for these methods, a merchant can typically qualify for a simplified Self-Assessment Questionnaire (SAQ), though they must still ensure their overall environment remains secure according to industry standards.
What are the common settlement timelines for APMs compared to card payments?
Settlement cycles for APMs vary significantly by method and region. While some real-time bank transfers settle within hours, others may have a 3 to 5 day delay.
Certain digital wallets may hold funds in a reserve before transferring them to the merchant's bank account. This differs from the standard T+2 or T+3 settlement typical of domestic card processing.
Merchants should carefully manage their cash flow to account for these varying cycles across different payment types.
Can I use APMs for recurring billing and subscription models?
Yes, several APMs support recurring logic, such as SEPA Direct Debit in Europe or certain digital wallet configurations. However, not every APM is suitable for automated, merchant-initiated transactions (MIT).
Some require the customer to be present (CIT) for every payment. It is necessary to verify whether a specific APM supports credential-on-file or tokenisation to facilitate recurring billing without requiring manual intervention from the customer for every cycle.
What is the typical cost structure for implementing APMs in high-risk sectors?
APM pricing is often more transparent than the Interchange Plus Plus (IC++) model used for cards. Most APMs charge a flat percentage fee per transaction or a fixed fee, sometimes without the complex layering of scheme fees.
For high-risk merchants, APMs can sometimes be more cost-effective as they bypass the high-risk surcharges often applied by card acquirers. However, specific regional methods may involve additional costs for currency conversion or cross-border settlement.
How do APMs handle Strong Customer Authentication (SCA) under PSD2?
Most modern APMs are designed with SCA as a native feature. Because these methods often require the user to log into their bank or wallet app, the authentication is handled as part of the payment flow itself, usually via biometrics or a one-time passcode.
This reduces the friction typically seen with 3-D Secure challenges in card payments, as the authentication is a natural step in the payment journey rather than an additional security layer.
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