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What are the safest ways to pay online?

Online payments have become an everyday occurrence for much of the world. Whether it’s paying bills or just some online shopping, the convenience of paying online instead of in person can’t be denied. However, with the potential threat of hackers and fraudsters getting hold of your credentials, what are the safest ways to pay online?

What are the safest ways to pay online?

Online payment methods: Pros and cons

Multiple online payment methods are available, from PayPal to credit cards and digital wallets. But what are the safest ones?

Generally, these are the best methods for secure online payments:

  • PayPal. Safe and secure.
  • Credit card. Well protected against fraudulent transactions.
  • Debit card. Great for controlling your spending.
  • Prepaid card. Provides a certain level of privacy.
  • Digital wallets. Convenient and straightforward.
  • Mobile payment apps. Great for paying friends and family.
  • Cryptocurrencies. Offer a degree of privacy.

So let’s look at their pros and cons to see which payment methods suit your needs the best.

PayPal: Very safe

PayPal is considered one of the most secure services for sending and receiving money online and online shopping.

Pros

  • pros
    Safety. PayPal ensures safe data transmission by using the secure socket layer (SSL) technology with 128-bit encryption.
  • pros
    Security. It does not share your financial information with merchants, reducing the risk of data breaches.
  • pros
    Buyer and seller protection. PayPal offers buyer and seller protection and helps resolve online purchase issues. It provides protection against unauthorized transactions and offers chargebacks.
  • pros
    User authentication. It adds a layer of security by using two-factor authentication (2FA) on its platform on a web browser (not the app), which means it will send you a one-time code on an authenticator app that you have to enter to complete the login process.
  • pros
    Convenience. It is widely accepted across various online platforms.
  • pros
    Multiple payment options. You can link credit cards, bank accounts, and debit cards to it.

Cons

  • cons
    Fees. PayPal charges fees for commercial transactions.
  • cons
    Data breaches. The company’s data has been breached in the past, and PayPal scams are not unheard of. You can delete your PayPal account anytime if you no longer wish to use this payment method.
  • cons
    Account restrictions. PayPal may freeze or limit your account for an extended period of time if it detects suspicious activity.
  • cons
    Hold periods. In some cases, PayPal may hold the funds you received, making them unavailable to you for a certain period of time.

Credit card: Well protected against fraud

A credit card is another popular and secure online payment method that is well protected against fraud. Especially if your card provider implements 3D Secure protocol.

Pros

  • pros
    Fraud detection systems. Most credit card companies and banks monitor transactions for unusual patterns and might block your card to stop a transaction if they notice something suspicious. You can also inform them if you notice fraudulent charges on your card so they can investigate and reimburse you.
  • pros
    Chargeback options. Credit card issuers typically offer a chargeback option in the case you did not receive the goods you paid for, if they are different from what you were led to believe they will be, or if billing errors occurred.
  • pros
    Limited to zero liability for fraudulent transactions. If your card is stolen and used without your permission, most credit card issuers either cap your liability at a relatively low amount or don’t hold you responsible. For more information, check out our analysis of a stolen credit card database.

Cons

  • cons
    Not anonymous. Banks issue credit cards, so it’s impossible to make anonymous transactions.
  • cons
    Debt accumulation. Overspending and resulting debt accumulation is a risk when using credit cards.
  • cons
    Security issues. You should be cautious about providing your credit card details on websites and make sure the websites are secure.
  • cons
    Interest charges. If you carry a balance on your credit card, it will incur interest charges.
  • cons
    Fees. Some credit cards may charge fees, especially for foreign transactions.

Debit card: Great for controlling spending

Debit cards are great for controlling how much you spend.

Pros

  • pros
    Controlled spending. A limited amount in your account prevents overspending.
  • pros
    No debt. You’ll be less tempted to indulge in impulse purchases when you have a limited amount of money, as opposed to shopping with a credit card. By paying this way, you will not accumulate any debt.
  • pros
    No interest charges. When you use a debit card, you are spending your own money, so you will not be charged interest. And if you lose your card or it gets stolen, the thief will not be able to spend more than is in the account.

Cons

  • cons
    Limited dispute resolution. Less robust dispute resolution and buyer protection.
  • cons
    Fewer options for recourse. When you pay for something with a debit card, the money is immediately taken from your account, so you have fewer options if you have purchased from a dishonest seller. Refunds may also be delayed.

Prepaid card: Provides a certain level of privacy

A prepaid card is similar to a debit card, but it offers more privacy than other ways to pay online.

Pros

  • pros
    Privacy. When purchasing a prepaid card over the counter, you don’t need to provide any personal information, so your purchase information will not be linked to you.
  • pros
    Don’t need a bank account. You can buy a prepaid card in a store with cash. You don’t need a bank account to purchase it.

Cons

  • cons
    Not completely private. Some cards designed for international transactions may need registration and activation, which involves providing some personal information like your name, address, and/or contact details. Some online merchants might store your shipping address and online purchase history. Also, when you are shopping online, the website and payment processor may log your IP address and location and link purchase history to you.
  • cons
    Fraud. Make sure you are buying it from a reliable seller so you don’t get scammed.
  • cons
    Limited dispute resolution. Prepaid cards offer limited buyer protection or none at all.
  • cons
    Limited use. Some online retailers and service providers, such as hotels or car rentals, do not accept prepaid cards.

Digital wallets: Very convenient

Digital wallets are characterized by their convenience because they allow for online, in-app, and in-person contactless transactions. Google Pay, Apple Pay, and Samsung Pay are the most popular and reliable digital wallets.

Pros

  • pros
    Fast and easy. Once you set up your digital wallet with your information, you can shop online with just a few clicks without repeatedly entering your payment details. Your credit card information is stored on your device, allowing you to pay with it simply by authenticating your identity (with a fingerprint or face scan).
  • pros
    Secure. The seller does not see your credit card number, only the transaction ID.
  • pros
    Multiple payment options. You can link multiple payment methods to your digital wallet, like credit cards, debit cards, and bank accounts.
  • pros
    P2P and in-store payments. Many digital wallets support P2P payments, so you can send money to friends and family with just a couple of clicks. They also facilitate international payments and currency conversions, so you can shop globally. You can also use a digital wallet on your smartphone for in-store purchases.
  • pros
    Encryption. Your payment information is protected with encryption technology and tokenization so that it can not be intercepted by hackers or compromised during transactions.

Cons

  • cons
    Limited acceptance. The main downside to digital wallets is that few online shops accept payments from them

Mobile payment apps: Best for paying friends and family

Mobile payment apps are very similar to digital wallets, but they are even more convenient for sending money to friends and family. In the US, the most popular mobile payment apps are Venmo, Cash App, and Zelle, and they are known for being quick and straightforward.

Pros

  • pros
    Easy to use. Mobile payment apps are straightforward and user-friendly.
  • pros
    Convenient. You don’t need to have cash. It is incredibly convenient for splitting bills and distributing the payments accordingly.
  • pros
    Instant payments. Mobile payment apps let you send and receive payments quickly from your social contacts with just a few taps on your smartphone.
  • pros
    Versatile. Some mobile payment apps allow you to maintain a balance in the app, while others need to be linked to your bank account.
  • pros
    Optional physical cards. Some mobile payment apps offer physical debit cards to use in stores and ATMs. However, with cybercrime on the rise, you should be careful when using mobile payment apps to avoid scams such as Venmo scams.

Cons

  • cons
    Limited acceptance. Not all merchants and service providers accept mobile payments.
  • cons
    Fees. Some apps have fees for instant withdrawals.
  • cons
    Public feed. Some mobile payment apps allow users to see their friend’s payment history, which might discourage some users from using these apps.

Cryptocurrencies: Most private and fully digital

Cryptocurrency, or digital currency, is fully digital and considered among the most private ways to pay online.

Pros

  • pros
    Private. Cryptocurrency transactions are linked to digital addresses instead of real-world identities.
  • pros
    Decentralized. A single entity or government does not control cryptocurrencies, so there is no central point of failure or attack.
  • pros
    Secure. Cryptocurrencies use advanced cryptography to secure financial transactions.

Cons

  • cons
    Technical knowledge. A certain level of expertise is needed to understand how crypto works and navigate cryptocurrency exchanges.
  • cons
    No central authority. It is very difficult to reclaim your coins because there is no central authority or clear regulation, so it is up to the users to protect their passwords and make sure they deal with reliable merchants. It may also be impossible to reverse a crypto transaction.
  • cons
    Limited acceptance. Relatively few merchants and online platforms accept payments in cryptocurrencies.

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