Alternative Payment Engines

Over the past year several new companies have emerged offering Alternative Payment Engines.  Alternative Payment Engines offer a creative way to increase sales, recapture lost sales, and in the case of subscription products increase customer retention.  Based on a Cost Per Acquisition (CPA) model, Alternative Payment Engines act as a broker between you and other merchants willing to pay a commission on sales.

Here’s how it works:

Instead of paying for your product or service directly, Alternative Payment Engines provide your customers with a series of offers from recognized brands.  If the customer takes one of these offers, you receive a commission from the recognized brand (typically more than the actual cost of the product they were purchasing), and the customer receives your product or service free.

Here’s an example:

  1. A customer is shopping, and chooses a $10 product from your online store.  At checkout, instead of paying with their credit card, they choose the “Get It Free” option provided by the Alternative Payment Engine.
  2. The Alternative Payment Engine gives the customer a list of offers from trusted brands.  You have previously pre-approved all of these offers, and established a minimum amount that you are willing to accept for the product.  For this example, let’s say that the customer chooses is for a VOIP phone service, and you have said that the minimum you will accept is $10.
  3. When the customer completes the offer provided by the Alternative Payment Engine, they are emailed a coupon code good for the product they wanted to purchase.  This gives the customer the product for FREE.Quick note: most Alternative Payment Engines offer an even tighter integration with your online store, allowing you to streamline this process.
  4. You receive a check from the trusted brand for $12.50, more than the minimum amount you previous established that you will accept.

Alternative Payment Engines can be used in any number of places within the sales process.  You can use them when a customer exits the cart without purchasing, when a customer cancels their subscription, as a post-sale upsale offer, or as a special offer to past customers who haven’t purchased in some time.

The offers provided by the Alternative Payment Engine are intelligent, meaning that previous customer activity as well as the customer’s profile (including location, machine type, time, previous purchases through the Alternative Payment Engine, etc.) are used to deliver the most relevant and effective offers to the customer.

There are several companies which provide Alternative Payment Engines, including:

You can also participate as an advertiser with these networks, offering your products or services to customers, and “sponsoring” their purchase of goods and services from other online stores.

There are a few downsides to Alternative Payment Engines.  First, you are sharing your customer data with other companies.  When the customer accepts the offer from the trusted brand, they are sharing their contact information (including email address).

Also, some Alternative Payment Engines don’t offer follow up tracking.  So if a customer cancels out of the offer process, you cannot follow up with an email.