How to Buy Online Without a Credit Card: 5 Alternatives Ways

Online shopping has reached unprecedented scale all around the world as people adopt smartphones, Tablets and Internet technologies like 4G. The trend was specifically accelerated during the recent pandemic which resulted in the imposition of lockdowns in many countries, causing people to order stuff online that they would otherwise buy from a physical store. According to DigitalCommerce360, the pandemic added a surplus of $218 billion to Ecommerce sales in the US. 

When it comes to online payment methods, there are several choices including credit card, debit card, Paypal, wire transfers and most recently, paying cryptocurrency via digital wallets. Most credit and debit cards operate on Visa and Mastercard networks and they remain the popular choice for both merchants and customers. According to a 2021 Oberlo report, credit card payment accounts for 21% of payments to online stores worldwide. 

But there are many reasons why one might not opt for paying via credit card. It could be avoiding exceeding the credit utilization ratio, concerns of credit card theft or other personal reasons. 

You might wanna avoid using your credit card for shopping online if you’re already reaching the 30% utilization of your credit limit. If your credit reports show your credit utilization exceeding the 30% limit, it’ll reflect badly on your credit worthiness and will cause a decline in your credit score. So if your other expenses on your credit card are already nearing 30%, you should avoid using your credit card for buying stuff online. 

As far as concerns of theft go, logging to shady stores and putting your credit card information there could expose this information to hackers. Avoiding it can be tricky for people who aren’t very tech-savvy. These websites usually aren’t SSL-certified and lack encryption and it’s extremely easy to hack unencrypted information. However, if you follow the safety principles, shopping with credit or debit cards online is pretty safe. 

But for those who want to avoid using a credit card for online shopping at all costs, there’s a number of different types of online payment methods. 

Alternatives to Credit Card for Online Shopping

1- Digital Wallet

If you’re an avid shopper but particularly uncomfortable putting your credit card information on different online stores, digital wallets are probably the safest alternative for you. Digital wallets basically act as virtual credit or debit cards. You can put your credit card information (in this case) on one of the digital wallets you prefer which encrypts the information and then pay online through this wallet instead of putting your credit card information directly.  

As far as credibility goes, The Identity Theft Resource Center states that digital wallets rely on security measures like two-factor authentication and Personal Identification Numbers (PINs) in addition to encryption that can only be used once. Many trusted wallets like Paypal, Apple Pay and Google Pay are good enough to protect your credit card information while allowing you to indirectly use it to buy stuff online.

2- Debit Card

Debit Cards are the third most popular choice of payment method after digital wallets and credit cards for online shopping. A debit card is a prepaid card and can be used as an alternative to credit cards for online shopping. If your credit utilization has jumped, you should avoid the risk of getting your credit score reduced and use a debit card instead for the purpose. 

3- Bank Transfer

The good old bank transfer, though somewhat out of fashion, is still a viable option for online shopping, provided that the merchant allows for the option. 

4- Cash on Delivery

Cash on Delivery is what it sounds like. You pay the merchant in cash via the delivery service when the package you bought reaches your door. It is the safest method simply because of its nature. Some merchants do not facilitate customers with this option but some do. It is also one of the most popular methods of payment for online shopping in the developing world due to concerns surrounding scams. 

5- Cryptocurrency

Cryptocurrencies like Bitcoin and Ethereum have been gaining steam with many customers as well as merchants for online transactions due to inherent privacy and decentralization. However, it is still not as widely available as a payment method as others on the list. 

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Habib Ur Rehman
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