Credit Card Alternatives to Collect Payments

Merchants often don’t realize they need credit card alternatives until their card readers stop working or the credit card network suffers an outage. The ISO and the payment provider’s job is to educate merchants on the importance of having alternative payment methods that help ensure seamless business operations to collect payments. This blog discusses why credit card transactions fail and the top 5 credit card alternatives that can help a merchant ensure business continuity in such situations.


Reasons Why Credit Card Transactions Fail

Invalid Pin

The most common reason for a transaction failure is an invalid pin. Ask your customer to try entering the pin again slowly to avoid mistakes if the transaction fails the first time. Usually, credit card companies allow users to enter the correct pin three times before blocking their secured credit card for misuse. 

Exceeded Limit

Heavy credit card users who do not check their statements regularly often exceed their credit limits. Users who pay their credit card bills on time and have a solid credit score can ask their card provider to raise their limit quickly. Others need to use an alternative payment method or a different credit card that still hasn’t reached a limit. People who are not great with budgeting should limit the number of credit cards they carry to ensure they don’t overspend.

Fraud Protection

If the credit card issuers notice any unusual activity on a card, they go ahead and block it immediately to prevent misuse. If your customer is the rightful card owner, they can call their card issuer to resolve this issue within minutes.

Missed Payments

People who are not great with money often end up borrowing money that they cannot return on time. In such cases, the credit card company penalizes the user with a bad credit score. In more severe cases, the company may block the card entirely until the user completes all pending payments first.

Card Reader Down

Sometimes a credit card alternative needs to come out not because of the customer but rather, because the merchant equipment does not work correctly. It is not on the user end, but the merchant front instead possesses the problem. A merchant cannot process a credit card correctly if their only card reader does not work correctly. To ensure continuity, merchants who deal with several daily transactions often should keep multiple card readers ready for use.

Credit Card Network Down

In extreme cases, the whole card network may suffer an outage. Even functioning credit cards and card readers cannot process transactions correctly in such situations when it’s time to collect payments. Accepting an alternative mode of payment becomes the only option for merchants to continue business operations. They need to get an alternative method of payment. Merchants can check Visa’s credit card network status here if they suspect that the whole network is suffering an outage.


Top 7 Credit Card Alternatives

Merchants can continue business in a credit card failure situation by collecting payments with different methods, including cash, debit cards, P2P transactions, reward points, or Gift Coupons. They can also receive online payment from a cash app, SMS texts, and other mobile payment options. Read on for the most commonly used credit card alternatives that they can rely on.


Cash remains the safest and quickest way of collecting payment transactions. Most merchants love receiving a cash payment. Some of these merchants also run a Cash Discount Program to encourage customers to pay in cash. However, people rarely carry cash anymore as a part of reasonable credit card alternatives. Studies show that over  80% of people prefer card payments over cash.

Debit Cards

Most merchants will ask the customers to use a different credit card or a debit card to pay if the first transaction fails. If the customer forgot the pin to their credit card or exceeds the limit, they can always use a debit card to pay. However, unlike credit cards, the individual needs to have the correct amount of funds in their bank accounts to pay with a debit card. A lot of the time, the credit and debit card networks are linked. So it is possible that if one network goes down, the other one suffers as well. However, it is still a good idea to double-check once before ruling this out as one of your options to collect payments.

P2P Cash Application

Merchants can also use the P2P cash application to accept payments if the credit card or debit card transaction fails. However, using such a mobile payments application has its downsides. The P2P transactions usually take place in the personal bank account of the merchant. Therefore, the final taxation and reconciliation processes become highly complicated to collect payments. Most ISOs will recommend you not use P2P applications to carry out business transactions.

Reward Points or Gift Coupons

Big retail merchants now have the flexibility to use dedicated secured cards to establish a line of credit with their loyal customers as credit card alternatives. These merchants afford to develop a “Buy now, pay later” scheme with these customers. However, such projects should ideally stay available only to loyal long-time customers to collect payments.

Online Payment from Merchant’s Cash App

ACH victorious stands as one of the safest and most underrated financial products that merchants can seamlessly collect payments. Using advanced applications like the iCG Pay Mobile Payments App, merchants collect payments via credit cards and ACH over the internet. Such applications help in the following situations:

  • Card reader down: The merchant does not need a card reader to accept payments via secure credit cards or debit cards anymore. The customers can now enter their credit card details to make mobile payments online to pay the merchant.
  • Card not present: The customer need not have the card physically present to pay anymore. Instead, if they have the card details like the card number, PIN, and CVV with them, they can log on to the merchant’s application to pay online.
  • Credit card limit reached: ISOs can help their merchants with these five card alternatives to ensure business continuity during a credit card outage. The customer can always choose to pay via online ACH if they have reached their credit card limit.

Learn more about the next-gen payment solutions that can help you accept credit card and ACH payments seamlessly.

SMS Text Payment

If the customer is uncomfortable logging on to the merchant’s application, the merchant can use SMS text payment solutions to send the customer a simple payment link. The customer uses that link to easily make their mobile payments for the services/products by logging on to their bank account on their mobile device. Merchants can also set up a recurring payment plan for their regular customers and send them a payment link on a fixed schedule automatically.

Mobile Payments

Collecting and managing mobile payments is super for the merchants now with a secure virtual terminal. This terminal is the single point of truth for merchants who want to manage their finances seamlessly. ISOs directly connect this virtual terminal with the merchant’s back-office accounting software like QuickBooks with enhanced plugins that do not require a single additional line of code.


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Date originally published: March 04, 2022


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