Consumers turning to alternative payment methods for online purchases

The online payment method PayPal will once again increase in popularity this year, according to the consumer advocate site Wallet Pop. This transaction management site allows consumers to link a secure account to either a credit or debit card to make simple payments without having to enter their account numbers on any merchant websites. By linking a PayPal account to a debit card, a consumer can make online purchases without taking on credit card debt.

However, another popular method is gaining prominence as well, and it allows even those consumers without a bank account to make purchases online, the report said. The payment system, called eBillme, is affiliated with over 800 different merchant sites, including large retailers like Kmart, Sears and Crutchfield, and also allows customers to buy gift cards to Amazon.com, JCPenney and Home Depot, among others.

The program works by allowing consumers to use cash to make online purchases, the report said. Instead of racking up credit card debt to make an online payment, a customer is sent a paper bill in the mail, which they can pay with cash or check. Like credit or debit transactions, eBillme affords consumers protections against fraud, and will also reimburse them if they find the same product for less online.

Some participating companies will even offer consumers who buy gift cards using eBillme to get a discount on future purchases, the report said. Typically, this amount is for between 5 and 10 percent, and can be spent on other purchases or, if the consumer chooses, can be sent as a check once the amount reaches $50.

Many polls have found that consumers are eager to avoid taking on credit card debt this holiday season because they worry about the effect it would have on their finances. Instead, they will turn to their debit cards, cash or even prepaid gift cards to make their gift purchases. Already this year, studies have found that spending has increased significantly as consumers feel they are in a better financial position than they were last year.