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Credit cards are now dominant method for purchasing cloud computing services
Credit card and alternative payments are more common among the second-tier cloud providers versus the cloud giants.
For generations, companies procured information technology through regular corporate procurement channels. Because IT procurement was a big, complicated deal.
The arrival of cloud services upended formal procurement processes, allowing users to purchase technology access via credit cards. The question is, how pervasive are more informal cloud purchases? At last, we have data on this, courtesy of Mike Maney at Linode/Akamai.
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A survey of 458 development professionals, managers, and senior leaders across 20 industries, commissioned by Linode/Akamai, shows growing interest in alternative cloud payment methods -- especially among smaller companies. There is rising interest in alternative cloud payment methods. More than half of the study's respondents (52%) use credit cards to pay for cloud services, and 48% "want to" use this payment method. 47% employ formal contracts and RFPs.
Alternative payments such as UPI, PayPal, Venmo, and cryptocurrencies, account for one quarter (25%) of payments. Another 36% would like to purchase more cloud services this way. At this point, 9% actually purchase cloud services with cryptocurrencies, and 16% want to do so this way.
Perhaps not surprisingly, smaller companies are more likely to be buying cloud services via credit cards -- 71% of the smallest enterprises in the survey, those with fewer than 50 employees, use credit cards. This compares to 24% of larger concerns with 5,000 to 10,000 employees.
Interestingly enough, though, credit card usage pops up again for organizations with more than 10,000 employees -- to roughly 40%. "It's likely these giants have multiple, independent businesses and buyers who want to access cloud resources without bureaucratic red tape and credit card costs," the survey's authors surmise.
Credit card and alternative payments are more common among the second-tier cloud providers versus the cloud giants (AWS, Google, Microsoft). At least 68% of respondents using second-tier providers report using alternative payments or cryptocurrencies, versus 31% for the biggest three cloud providers. "One likely reason is that alternative cloud providers can be more flexible in the payments they accept than hyperscalers with huge infrastructures," the survey's authors state.
Almost every vendor takes major credit cards, the study shows. Wire transfers are also widely accepted. Many vendors offer various pre-paid and contractual models. "Perhaps more surprisingly, the only alternative payment that's somewhat widely accepted is the most established: PayPal. But not by the Big Three. Google Pay is a distant second. (Ironically, you can't use it to pay for Google Cloud Platform.)."
Here is the rundown on who accepts what:
- AWS: Alternative Payments: No | Crypto: No | Credit Cards: Yes
- Azure: Alternative Payments: No | Crypto: No | Credit Cards: Yes
- Google Cloud: Alternative Payments: PayPal (only as backup) | Crypto: No | Credit Cards: Yes
- Digital Ocean: Alternative Payments: GooglePay, PayPal, ApplePay | Crypto: No | Credit Cards: Yes
- Equinix: Alternative Payments: No | Crypto: No | Credit Cards: No
- Hetzner: Alternative Payments: PayPal | Crypto: No | Credit Cards: Yes
- Linode: Alternative Payments: GooglePay, PayPal | Crypto: No | Credit Cards: Yes
- OVHcloud: Alternative Payments: PayPal | Crypto: No | Credit Cards: Yes
- UpCloud: Alternative Payments: PayPal | Crypto: No | Credit Cards: Yes
- Vultr: Alternative Payments: AliPay, PayPal | Crypto: BitPay (BTC, BCH, ETH, DOGE, PAX, BUSD, LTC, USDC, GUSD) | Credit Cards: Yes
"The report offers a number of insights around the need for cloud providers to support new payment methods accompanying a growing interest in alternative cloud suppliers," Maney relates.