Alternative Payment Methods for Subscription Businesses: Should You Accept Crypto, BNPL, or Digital Wallets?

Businesses that don’t offer customers a range of convenient payment options risk alienating customers and limiting their growth potential.
That’s why subscription-based businesses adopt alternative payment methods (APMs) to improve customer acquisition and retention. While credit cards and bank transfers continue to dominate, APMs such as cryptocurrency, Buy Now, Pay Later (BNPL), and digital wallets are reshaping the payments landscape.
Don’t believe us, believe the stats:
- Alternative payment methods are projected to grow faster between 2022 and 2027 than payments performed with cards.
- About 60% of consumers of all ages say they prefer BNPL options over credit cards.
But are these payment methods worth integrating into your subscription model?
This article will help you explore different payment methods, including their functionality, benefits, and risks.
What Are Alternative Payment Methods for Subscription Businesses
Subscription businesses rely on seamless, recurring payments to maintain revenue and customer retention. While traditional payment methods like credit and debit cards have long dominated the payments market, APMs are gaining traction.
Today's consumers expect flexible payment options and subscription-based companies that don’t provide them risk losing potential subscribers.
What Are Alternative Payment Methods (APMs)?
Alternative Payment Methods (APMs) are nontraditional payment options that go beyond cash and major credit cards. They are designed to offer greater convenience, security, and accessibility.
They include a variety of payment options, such as cryptocurrency (e.g., Bitcoin, Ethereum), BNPL services (e.g., Klarna, Affirm, and Afterpay), and digital wallets (e.g., Apple Pay, Google Pay, and PayPal).
Some other forms of APMs include direct debits, real-time payment (RTP), and prepaid cards.
About 60% of consumers of all ages say they prefer BNPL options over credit cards.
Why Subscription Businesses Are Exploring APMs
Subscription business models depend on recurring revenue, and APMs help ensure consistent, hassle-free payments. Businesses are adopting APMs to:
- Reduce failed payments and churn: APMs minimize disruptions caused by expired credit cards or declined transactions.
- Enhance customer acquisition: They provide multiple payment options, making it easier for global customers to subscribe.
- Improve security and fraud protection: Many APMs use tokenization and biometric authentication, which reduce fraud risks.
- Stay competitive: Modern consumers expect convenience, and APMs provide a faster, frictionless checkout experience.

The Role of Cryptocurrency in Subscription Payments
Cryptocurrency is emerging as a viable payment option for subscription businesses. Not only does it enable decentralized, borderless transactions, but it also helps lower transaction fees compared to traditional payment processors.
How Cryptocurrency Works for Recurring Billing
So, how does cryptocurrency work as a recurring payment solution?
Unlike traditional payment methods, crypto payments occur via blockchain networks, which are considered decentralized, secure, and transparent. To use cryptocurrency, both the business and the customer need to have a crypto wallet – an online or hardware-based device to store and manage digital assets.
Smart contracts are one of the most innovative applications of crypto for subscriptions. These self-executing contracts automatically issue payments at scheduled intervals without requiring manual intervention.
However, smart contracts are not widely adopted for recurring payments. Most companies still prefer using a crypto payment gateway, such as BitPay or Coinbase Commerce, that converts crypto payments into fiat currency, helping minimize the risks of price volatility.
Benefits of Accepting Cryptocurrency
For subscription payment processing, cryptocurrency offers a range of benefits, such as:
Global Accessibility
Cryptocurrency allows businesses to get paid anywhere across the globe without the limitations imposed by banks or conventional banking infrastructures.
It’s particularly beneficial to international subscription companies with customers in areas with poor (or limited) banking facilities.
Lower Transaction Fees
Compared to credit card processing fees (typically 1.5-3.5 %), crypto payments often have relatively lower fees, especially for direct peer-to-peer payments. This means lower costs for subscription companies.
Enhanced Security and Privacy
Blockchain transactions are encrypted and decentralized, so they are extremely secure. And since crypto payments don’t involve sharing personal bank details, they protect consumers' privacy better. This greatly limits fraud risks.
Challenges and Risks of Crypto for Subscription Businesses
Like any online payment method, it has a few downsides you should know:
Price Volatility
One major challenge of cryptocurrency is its price volatility, which complicates subscription billing optimization.
A subscription plan priced at $50 in Bitcoin today can be worth dramatically higher or lower tomorrow, which makes it difficult to maintain consistent billing.
To mitigate this risk, utilize crypto payment gateways that automatically convert cryptocurrencies into fiat currencies.
Regulatory Concerns
Cryptocurrency regulations vary across countries, and crypto payments are heavily restricted in certain nations. It’s essential for companies to remain compliant with procedures to avoid legal issues.
Fraud Risks and Limited Refund Capabilities
Unlike credit card transactions, crypto payments are irreversible, making refunds difficult to process. This can be problematic for businesses that offer money-back guarantees or refunds for canceled subscriptions.
Limited Adoption
While crypto is growing in popularity, it remains a niche payment method. Many customers prefer more familiar options like credit cards and digital wallets, so businesses must assess whether crypto aligns with their audience.
Successful Case Study: Cryptocurrency Payments for SaaS Subscriptions
Due to its decentralized nature, cryptocurrency is particularly relevant for SaaS companies.
NordVPN, a virtual private network service, integrated crypto payments with CoinGate. By accepting cryptocurrencies, NordVPN expanded its customer base across 176 countries, catering to privacy-conscious users who prefer decentralized payment methods. Since integrating with CoinGate, NordVPN has seen a 13% annual increase in crypto payments.

Buy Now, Pay Later and Subscription Billing
BNPL allows customers to split payments into manageable installments. This alternative payment method is useful for high-value subscription plans or annual billing cycles.
What Is BNPL and How Does It Work for Subscriptions?
BNPL is a payment method where customers can separate or split payments, often with no interest.
Although mainly used for one-time purchases, BNPL is taking center stage in subscription-based businesses, especially for higher-value plans or annual billing cycles. Instead of paying the entire cost upfront, BNPL companies such as Klarna, Afterpay, Affirm, Zip, and Sunbit break the larger cost of an annual subscription into manageable payments.
For instance, a client who signs up for a $600 annual subscription may be reluctant to make the complete payment in advance. However, with BNPL, they can divide the subscription into four monthly payments of $150, making it more manageable while still adhering to the entire duration. This flexibility helps businesses gain more customers and drive conversions.
Advantages of BNPL for Subscription Businesses
The benefits of ‘Buy Now, Pay Later’ for subscription businesses include:
Higher Conversion Rates
BNPL gives customers a convenient way to pay for subscriptions over time, eliminating budget constraints. This payment option makes it easier for customers to sign up, especially those who can't afford large, upfront costs. With BNPL, customers make smaller payments over time, often paying less per month than they would with traditional monthly payment plans.
Increased Customer Lifetime Value (LTV)
By offering customers higher-tier or longer-term plans, BNPL encourages them to take longer plans rather than cheaper, shorter-term plans. This enhances customer lifetime value and revenue predictability.
Lower Churn Risk
One of the biggest tests for subscription companies is involuntary churn caused by a declined payment because of an insufficient balance or an expired credit card.
BNPL solutions offer pre-approved, scheduled payments, significantly reducing the risk of failed transactions for merchants. Since BNPL providers assume the risk of payment defaults, merchants can enjoy more reliable cash flow and higher customer retention without bearing the burden of missed payments.
Risks and Operational Challenges of BNPL
Now that you know what benefits it offers to potential customers let’s examine the drawbacks:
Higher Merchant Fees
BNPL services charge sellers more than normal payment processing – typically 3% to 6% of each transaction. Although higher conversion rates or price adjustments can offset this fee, it is an important factor for businesses with low profit margins.
Chargeback and Defaults
Unlike credit cards, where banks handle missed payments, BNPL providers take on the risk of customer defaults. Yet, merchants remain at risk for chargebacks if customers dispute transactions or fail to meet payment obligations.
Integration Complexity
Incorporating BNPL in a subscription model means collaborating with a BNPL partner, ensuring compliance with their terms, and integrating the payment system with existing billing platforms. Companies must carefully consider whether the benefits outweigh the upfront costs of implementation.
Real-World Use Case: BNPL For Food Delivery Orders
DoorDash, an online food delivery platform, partnered with Kalrna to offer U.S. customers the option to split payments into four interest-free installments for orders over $35. This flexibility caters to consumers' payment preferences and could enhance customer acquisition and retention. Though the reaction to the announcement has been mixed.

Digital Wallets: Enhancing Subscription Payment Success
Digital wallets are financial apps that enable users to keep funds, conduct one-click transactions, and monitor payment records on devices such as smartphones and tablets.
For subscription businesses, digital wallets provide a seamless and secure way to process recurring payments, improving customer retention and reducing failed transactions.
Now, let's examine how digital wallets for recurring payments work.
What Are Digital Wallets and How Do They Work?
Digital wallets, or e-wallets, are electronic payment instruments that securely store credit card, debit card, and bank account information to facilitate one-click transactions on online and in-store purchases. Rather than entering payment details manually, customers can pay instantly and securely with a simple click on their smartphones, tablets, or computers.
Apple Pay, Google Pay, PayPal, Alipay, and Samsung Pay are some popular digital wallets. They use high-end security functions such as:
- Tokenization: Encrypts payment details so that card information isn’t directly shared with merchants.
- Biometric Authentication: Uses fingerprint or Face ID verification to enhance security and prevent unauthorized transactions.
Why Digital Wallets Are Gaining Popularity in Subscription Payments
Here are a few cogent reasons why digital wallets are becoming popular:
Higher Conversion Rates
They provide quick and easy checkout. This means less cart abandonment and an easier subscription process for the customer.
Reduced Payment Failures
Unlike credit and debit cards, digital wallets don’t expire, meaning there are fewer disruptions due to outdated payment information.
Stronger Fraud Protection
The multi-layer security system, which consists of encryption and biometric verification, greatly reduces fraud and unauthorized transactions.
Potential Drawbacks of Digital Wallets for Subscription Businesses
While digital wallets provide numerous benefits, there are a few loopholes every subscription-based business should consider:
Limited Adoption in Some Markets
Not every customer utilizes digital wallets, so businesses need to continue offering alternative payment methods.
Dependency on Third-Party Providers
When a digital wallet service is down, users may have difficulty processing payments.
Merchant Processing Fees
Transactions made through digital wallets often incur greater processing fees than direct bank transfers, impacting profit margins.
Successful Case Study: Digital Wallets Boost Business Insider’s Subscribers
In a compelling example of how alternative payment methods can boost conversions, Business Insider saw a 15% conversion boost by implementing a mobile one-click paywall that enabled digital wallet payments like Apple Pay and Google Pay. By reducing friction and aligning with user preferences, the simplified checkout process drove more subscriptions and highlighted the impact of offering alternative payment methods in a mobile-first world.
Key Considerations When Integrating Alternative Payment Methods
Before adopting APMs, businesses must assess security, compliance, customer preferences, and operational challenges. Performing A/B tests can help determine which payment methods align with customer needs and minimize risks.
Listed below are some factors you should consider:
Security and Compliance Challenges
Regulatory requirements such as PCI-DSS, GDPR, and AML/KYC laws must be met to ensure data security and prevent fraud. Businesses must also implement fraud risk management strategies to safeguard against unauthorized transactions and chargeback disputes.
Customer Segments and Payment Preferences
Payment preferences can vary across demographics. For instance, Gen Z and Millennials favor BNPL and digital wallets for convenience, while tech-savvy consumers may prefer crypto for privacy and decentralization. On the other hand, B2B clients and older end users may lean towards direct debit and ACH transfers for recurring payments.
Operational and Technical Challenges
Integrating APMs necessitates compatibility with current billing platforms, which can be complicated. Businesses should rigorously test the integration and functionality before moving on to usability testing. Subscription models depend on seamless, automated billing, so companies must ensure that APMs do not interfere with renewals or heighten payment failures.
Conclusion
There you have it! Alternative payment methods such as Crypto, BNPL, and digital wallets can boost conversions, reduce churn, and provide better payment experiences. However, implementation can be complex, along with the associated challenges of APM. These include regulatory concerns, transaction fees, and challenges with technical integration.
Before adding any APM to your subscription business, evaluate customer demand, technical feasibility, and risk factors. Also, test it on a small scale to minimize disruptions. After all, not every payment method fits every business.
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