9 different payment methods to choose from [Complete list] (2024)

Gone are the days of only being able to pay by cash or even cheque. Our world is changing so fast and with all the technological advancements taking place, you could even pay for a purchase with your watch or smartphone, if that’s more convenient for you.

Times certainly are changing. The payment methods available to us today are far more in number and convenience, and this is just the beginning. If you’re curious about the various types of payment methods, stick with us and find out.

Table of Contents

  1. Debit card
  2. Credit card
  3. Prepaid card
  4. Contactless payments
  5. Payments with a smartphone
  6. Mo/To payments
  7. Cash
  8. Payment Requests
  9. Bank transfers

Different types of payment methods

Debit card

Debit payments are usually associated with an issued debit card in the cardholder’s name. While they may look similar to credit cards or even prepaid cards, the mechanics that drive them are different.

One of the distinguishing features of a debit card is that it enables you to use funds that you already own. These funds are in your account and you’ve earned them in some way or another.

They do not make up a loan from a bank or a line of credit. This is your cash. And you can use it to pay at practically all merchants with a , as well as make purchases online.

Keep in mind that paying by card often leads to more impulse purchases and that these unplanned events can create a misaligned budget.

Credit card

Much like the name implies, payment with a credit card works like this: a card is issued to the cardholder based on their credit history, with a certain monetary value that the cardholder can use in exchange for paying it back to the lender at a later date and at a specific interest rate.

The challenge with credit card payments is that because they’re so easy to use, it’s also quite easy to spend more and this means going beyond one’s means.

On the positive side, a credit card payment is useful for making larger purchases in one go, which can be paid off in smaller monthly installments over a period of time.

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Prepaid card

A prepaid card is one that is preloaded with cash and can be used similarly to a debit or credit card because it enables cardholders to make purchases at merchants with card readers either contactless, via Chip&PIN, or through a magstripe.

These cards are preloaded with cash that the cardholder already has and in addition, it is unnecessary to open an account with a financial services provider in order to use one, unlike debit and credit cards.

Contactless payments

Contactless payments work using near field communication, or NFC, technology and can enable a cardholder of a debit, credit, or prepaid card to make payments simply by hovering the card or tapping it lightly over a card reader or POS terminal.

They are almost instantaneous, as the process of communication between the cardholder’s issuing bank, the acquiring bank, and the merchant’s financial services provider takes only a few seconds.

There are many benefits to contactless payments, including the fact that they’re much safer than magnetic stripe payments. However, there are some associated risks in that a thief who gets access to a cardholder’s card may be able to make purchases up to a certain limit without being detected.

Therefore, a PIN number must be entered after a series of consecutive transactions or you have made purchases with a contactless card to help improve security.

Payments with a smartphone

The two most popular digital wallets today are Apple Pay and Google Pay and they enable a cardholder to enter their card details in their wallet, which are then saved for future use.

Much like debit, credit, or prepaid cards, a cardholder simply needs to hover their smartphone over a POS terminal in order for the transaction to be processed.

One excellent security feature of phone payments is the aspect of tokenisation, meaning that actual card data is encrypted and decrypted in the process to improve safety.As a merchant, you can also take card payments on your phone.

Mail Order / Telephone Order payments

Say that you’re planning a trip to an exotic location around the world and you’d like to reserve your accommodation. Physically, paying at a POS terminal is impossible, and therefore, virtual terminals were created.

Essentially, payment through a virtual terminal enables the cardholder to read out their details to a merchant on the other side of the line, who then enters these card details into the virtual terminal and the payment is then processed.

In this way, you can make even your reservation if you are miles away from the physical location where the payment needs to be made.


Cash hardly needs an introduction, as it’s been with us for decades and even centuries. However, because of some of the different payment methods discussed above, the world is slowly turning into a cashless society, as the safety of cash is questionable and it does not offer the same level of convenience as card payments.

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For example, unless you’re doing curbside pickup or paying for delivery in cash, payments online with cash are quite limited. Also, there’s a physical risk to carrying cash if someone robbed a cardholder.

However, it’s great for small purchases and there is a vast network of ATMs that can be accessed to withdraw more. Remember that these ATMs usually charge fees for withdrawals.

Payment Requests

Payment Requests are one of the online payment methods for small businesses that can be utilised to ensure payment is processed quickly and efficiently.

A Payment Request is a one-time link that is sent to a customer who is then taken to a secure payments page on which to enter their card details and proceed with the payment. Once done, the payment is approved and the customer can proceed.

Other variations of Payment Requests are PayLinks, which can be sent via SMS, email, or a chat app to multiple customers in one go. The logic behind the payment in terms of the cardholder being taken to a secure payments page is the same.

Bank transfers

Bank transfers refer to the exchange of funds through online banking services. It involves a transfer of funds from one account to another account, which can be at a different banking institution, and what’s usually required for this is the recipient’s correct IBAN number, recipient’s names, etc.

Since these transfers are usually performed between one financial institution to the next, there are high levels of security involved. However, there may be associated costs depending on the amount being sent as well as whether you’re sending funds to a person with a different financial institution.

Final thoughts

While this is not an exhaustive list of all the different types of payment methods, it certainly covers the most prevalent and commonly used ones.

Whichever payment method you choose to use, or a combination thereof, always remember to have security at the forefront of your mind and take steps to keep your personal data safe and out of the hands of fraudsters and bad guys.

As a seasoned expert in financial technology and payment systems, I've closely monitored the evolution of payment methods in our rapidly changing world. With a depth of knowledge backed by years of experience, I can confidently guide you through the intricacies of the various payment concepts discussed in the article.

Debit Card: A debit card allows users to access funds they already own, making purchases at merchants or online. Unlike credit cards, it does not involve a line of credit or a loan. The article rightly points out the risk of impulse purchases and the importance of managing one's budget when using a debit card.

Credit Card: Credit cards provide a monetary value to the cardholder based on their credit history. The user can make purchases with the promise to pay it back at a later date, often with interest. While convenient for larger purchases, the article emphasizes the challenge of overspending and the need for responsible use.

Prepaid Card: Prepaid cards are loaded with cash and function similarly to debit or credit cards. They don't require a bank account, offering flexibility. The article accurately highlights their use in various payment scenarios and the absence of the need for a financial services account.

Contactless Payments: Utilizing NFC technology, contactless payments allow cardholders to make quick transactions by tapping the card over a reader. The article emphasizes their speed and safety compared to magnetic stripe payments. However, it acknowledges potential risks, necessitating security measures like PIN entry after consecutive transactions.

Payments with a Smartphone: Digital wallets such as Apple Pay and Google Pay enable users to make payments by hovering their smartphones over POS terminals. The article rightly underscores tokenization as a security feature, encrypting and decrypting card data for enhanced safety during transactions.

Mail Order/Telephone Order Payments: For scenarios where physical payment is impossible, virtual terminals facilitate transactions. The article explains how a cardholder can provide details to a merchant via phone, and the merchant enters these into a virtual terminal for processing.

Cash: While cash has been a traditional payment method, the article acknowledges the global shift toward a cashless society due to safety concerns and the convenience of card payments. It emphasizes the limitations of online cash payments and the physical risks associated with carrying cash.

Payment Requests: Payment Requests, including PayLinks, provide efficient online payment solutions. The article explains how businesses can send one-time links to customers for secure payment processing, ensuring quick and hassle-free transactions.

Bank Transfers: Bank transfers involve exchanging funds through online banking services, offering security but potentially incurring costs. The article outlines the requirements for bank transfers and emphasizes the high levels of security associated with this method.

In conclusion, the article provides a comprehensive overview of various payment methods, highlighting their features, advantages, and potential risks. It encourages users to prioritize security and adopt responsible practices in the evolving landscape of financial transactions.

9 different payment methods to choose from [Complete list] (2024)


What are the different methods of payment? ›

Top 8 Payment Methods and How to Accept Each Payment Mode
  • Credit Cards. Credit cards offer a quick and convenient way to make financial transactions both large and small. ...
  • Debit Cards. ...
  • Automated Clearing House (ACH) ...
  • Cash. ...
  • Paper Checks. ...
  • eChecks. ...
  • Digital Payments. ...
  • Money Orders.

How do I decide which type of payment method to use? ›

4 essentials to consider when choosing a payment method
  1. Total cost of ownership.
  2. Customer preference.
  3. Involuntary churn & failed payment rates.
  4. Trust and safety.
  5. Conclusion.

What are your payment options? ›

A payment can be made in the form of cash, check, wire transfer, credit card, or debit card. More modern methods of payment types leverage the Internet and digital platforms.

What payment method you prefer? ›

Preferred Payment Methods in the US by Age Group
Age GroupPreferred Payment Method
9-25 (Gen Z)Debit cards, cash, credit cards
26-41 (Millennials)Debit cards, credit cards, cash, mobile wallets, bank transfers
42-56 (Gen X)Credit cards, debit cards, bank transfers, checks
1 more row

What are the 5 mode of payments? ›

Commonly accepted payment methods include cash, credit cards, debit cards, gift cards, and mobile payments. Customers can select their preferred payment method based on what's the most convenient and their own personal preference.

Which method of payment is the most common and the most secure? ›

What is a secure payment method? Debit or credit cards are generally regarded as the safest.

What is the most preferred online payment method? ›

Credit and debit cards are the most popular payment method for making online purchases.

What factors does the choice of payment method usually depend on? ›

Using the PLS-SEM method, the results found that transaction value, income, education, awareness ease of use, and awareness of risk have positive and significant impacts in increasing the likelihood of consumer's behavior in choosing an electronic payment method.

How many payment methods are there? ›

The top 12 payment methods are credit cards, debit cards, prepaid cards, autopay, cash, paper cheques, Buy Now Pay Later (BNPL), Netbanking, mobile payments, UPI & QR codes, POS terminals, and digital wallets.

Which payment option is considered the safest? ›

Secure online payment methods
  • Credit cards. By and large, credit cards are easily the most secure and safe payment method to use when you shop online. ...
  • ACH payments. ...
  • Stored payment credentials. ...
  • Credit cards with EMV chip technology. ...
  • Credit cards with contactless payment. ...
  • Payment apps.
Feb 11, 2023

Why is it important to have many payment options? ›

Why is it important to have multiple payment methods? Multiple payment methods have numerous benefits, including maximizing conversion rates, increasing customer loyalty, reducing the chances of an abandoned cart, and improving the overall customer experience.

Which type of payment is most easily? ›

Contactless payment is considered a quick and easy way to pay since it doesn't require consumers to input a PIN.

What payment method is the fastest? ›

Wire Transfers

They involve sending money directly from one bank account to another. A wire is the simplest global payment method because it requires no middleman to handle the transfer, and the fastest method, as funds are received by the payee on the same day, or within 1-2 business days.

Which one is the best payment? ›

Top Best UPI Apps in India 2024
  • Google Pay. Google Pay is at the top of the list among the best UPI apps in India. ...
  • PhonePe. It started in 2015 and is amongst the most widely used apps in the country. ...
  • BHIM App. This app is a really useful one and supports 20 different languages. ...
  • Paytm. ...
  • CRED. ...
  • Freecharge. ...
  • iMobile App. ...
  • Mobikwik.
Feb 8, 2024

What are the 3 methods of payment debit card? ›

Debit cards are primarily used for three purposes.
  • Online Payment. Here's how to use your debit card for online payments: ...
  • Offline payment. To pay at a store, restaurant etc.: ...
  • ATM Cash Withdrawal. In case you need to withdraw cash from an ATM machine, this is all you need to do.
Jun 28, 2023

How many types of payment terms are there? ›

Net 7, 10, 30, 60, 90 – Net payment terms show that the payment is due the specified number of days after the invoice date of issue.

How can I pay without a credit card in store? ›

To pay in stores using your phone, you'll need to make sure Google Pay is downloaded and set up on your phone first. Get the Google Pay app on your Android phone. It only takes a few minutes to set up Google Pay on your phone.

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