We usually recommend paying by credit card when shopping online. It's a widely accepted payment method and you shouldn't be liable for unauthorised or fraudulent transactions. The rising concern about online fraud, however, suggests it's not an entirely safe option. So what are the other options - short of never shopping online again?
Always at risk
No matter which payment option you choose to use, there's always some element of risk - online or offline. It's good practice to:
- Always check your account statements carefully. If a transaction doesn't look familiar, raise the issue with your provider.
- Only shop at websites that use a secure payment facility indicated by a locked padlock in the right-hand corner and https:// in the address line.
- Read email from your bank, credit union or a third-party payment service carefully. These organisations don't ask for account details via email.
- Never tell anyone your passwords or PINs.
Third party payment options
If you're dead against keying in your credit card details every time you shop online, a third-party payment service may suit you. These facilities act as an intermediary between you and the merchant so you don't have to disclose your credit card or bank details to sellers. The drawbacks, however, may include registration fees, transaction charges and a limited number of participating websites.
PayPal (www.paypal.com.au) is an online payment service owned by eBay that allows you to send money to anyone (as long as they have an email address) via the internet. You register with PayPal to setup an account that's linked to your credit card or nominated bank account. To pay for items, log in to your PayPal account and enter the email address of the recipient and the amount you wish to pay. PayPal sends an email notification to the recipient, who then logs into their PayPal account and checks that the money has arrived.
PayPal supports Australian dollar payments (there are more than one million Australian accounts), as well as US dollars, Canadian dollars, euros, pounds sterling and yen. It's one of the safest ways to pay for goods, particularly if you use online auction services.
PayPal is a popular target for online email scams in which fraudsters try to steal your account details in order to access your money. Read all emails purporting to be from PayPal carefully and always type in the website address when accessing your account.
Credit card security blanket
If you prefer to use your credit card, consider registering for the additional authorisation services offered by some credit card providers.
The services from MasterCard (SecureCode) and Visa (Verified by Visa) require you to add a password or secure PIN to your credit card. In addition to entering your credit card number as usual, you'll be prompted for your SecureCode PIN or Verified by Visa password when you're shopping at participating stores. These verify that you're the authorised holder of the credit card. If you don't enter the password or PIN, your transaction won't be finalised.
SecureCode is offered by providers such as the Commonwealth Bank (CBA), National Australia Bank (NAB), St George and ANZ.
Verified by Visa is offered by providers including ANZ, CBA, St George, National Australia Bank and Bank SA.
To find participating stores, look for logos on websites or contact your card issuer.
A similar process of authentification occurs if you use American Express (Amex), but as a cardholder, it's unlikely you'll notice it. Amex merchants can verify transactions by calling Amex. The merchant then checks the card information against Amex files. If necessary, Amex will contact the cardholder to verify the transaction.