Credit Card Use for Online Purchases
From groceries to monthly utility payments, accepting credit cards online is nearly ubiquitous amongst e-commerce retailers and online businesses. Should you be careful about entering your credit card number so readily at every checkout landing page? Probably not as attentive as you should be when a server takes your credit card to the back of the restaurant at the end of a meal or when you swipe your ATM card at the grungy-looking machine in the corner of a cash-only place. There are just as many dangers for credit card use at brick and mortar retailers as there are in virtual retail spaces. Here are a few tips and tricks for making sure that both retailers and consumers are protected during this era of online purchasing.
Image credit: nobeastsofierce / 123RF Stock Photo
Consumer side tips
1. Secure yourself and your surroundings
Make sure you use your own personal computer and a secured wireless network when making online purchases. If you do use a public network or a shared computer, be wary of how much information will remain on the computer after you leave. To make sure you don’t leave a trail, clear the computer of your order history and log out afterwards.
Remember that you are only as secure as your computer is. Stay up to date on computer scans with reliable anti-virus software. It doesn’t matter how secure the website you are using to enter your credit card information is if you have a key logger virus on your laptop hiding and noting down everything you type.
Finally, when clicking on email links, confirm that the website the embedded link takes you to is the same URL as the one stated in the original email. Sham websites that have almost the same URL as secure ones can be used to collect credit card information.
2. Don’t keep vulnerable information saved online
Many retailers like Ebay or Amazon allow you to save a credit card number or in your account profile for quick purchasing abilities. Opt out of these services as you increase the risk of fraud—for example, if you forget to log off or if your password becomes compromised. Minimize the risk by going through the motions of entering your number in manually each time. This is a potent method to get you to think about how much you are spending on your purchases as well, instead of mindlessly ordering without thought or consideration.
3. Use a credit card online, not debit
Credit card companies offer more stringent protection against unauthorized purchases than debit cards. Furthermore, most credit cards have a $0 liability fee for unauthorized purchases, and at most you are only responsible for $50. Debit cards, on the other hand, hold you responsible for $500 of non-authorized purchases and bear the risk of potentially depleting your entire checking account.
4. Don’t use the credit card number on the back of your card
Several credit card companies have services that issue a temporary or alternative credit card number that is linked to your own credit card for online shopping purposes. This “virtual account number”, as Citi calls it, or ShopSafe from Bank of America, provides protection against unauthorized purchases online. You can get these alternative virtual numbers for free from Citi, Bank of America, or Discover. There are time and payment limits for virtual accounts - keep those in mind when making purchases.
5. Find out before it’s too late: check your credit card statements
Keep proper records of your online purchases, either by printing PDFs of each purchase, or taking screenshots of your final receipt. When receiving your credit card statement, verify that the retailer has only charged for the amount detailed in your records.
6. Pick top credit cards for online purchases
A factor to keep in mind when choosing a credit card mainly for online shopping is the virtual account number option detailed above. Credit cards also offer other features to optimize your online shopping experience. Look for cards with warranty assurance, purchase protection, returns protection, shipping deals, and exciting rewards for online retailers.
If you are a retailer looking to expand the e-commerce part of your business, much of the same advice offered on the client side is just as applicable to you.
1. Keep your website secure
If you are hosting your own domain, make sure you choose a provider with secure network and domain hosting. The last thing you want to deal with is a tarnished reputation for faulty online purchasing.
2. Choose the correct payment gateway
There are two ways to accept credit cards as a form of payment online. You can create your own merchant account through a local bank, and also, use a third party payment gateway like PayPal. Obtaining your own merchant account may be too much work and upfront cost for an e-commerce site just starting out. However, for more established businesses, merchant accounts offer lower transaction fees.
Using a reputable third party gateway instead such as PayPal offers some peace of mind to both you and your customers concerning secure purchasing. The downside to some payment processing companies is that there is a lag in the retailer receiving payments which can be as long as 60 days after the date of purchase. Google Checkout and PayPal, however, render payments directly into your bank account.
You should feel comfortable using and accepting credit cards online if you follow the guidelines above and realize it’s just as vital to use common sense and remain diligent online as it is when you’re standing in the checkout line.
About the Author-
Angie Picardo is a staff writer for NerdWallet. she helps consumers to have better understanding of personal finance.