Shopping Online: The Safest Ways to Pay

Advancing technology, and the lingering effects of COVID-19, have changed the way we shop. The popularity of e-commerce has increased dramatically in recent years, especially around the holiday season. Who wants to battle against strangers for the perfect gift, spend ages in line to check out, and hop from shop to shop to find the perfect gift for everyone, when you can do the same thing online in a fraction of the time? Billions of dollars are spent while shopping online every year, and the number of stores that offer online services grows with every day that passes. The expansion of ecommerce has especially been driven by the COVID-19 pandemic, which forced traditional brick-and-mortar stores to rapidly create online sales environments or risk permanent closure. During this period of time, many consumers also became used to the convenience of online shopping, the variety of goods offered, and the speed with which many goods are delivered. Several of the largest retailers offer shipping in two days or less, a trend established by Amazon. 

However, despite the increasing ease of digital retail, shopping online requires consumers to give up personal details they wouldn’t have to give in a brick-and-mortar store. Not only does this enable retailers to harm consumer privacy, it also increases the risk of that information falling into the hands of cybercriminals. So, what’s the best way to pay safely online? Here’s what you should know about different payment methods, and online shopping in general:

• The risks of online shopping
• Website red flags
• Payment method pros and cons
• Extra security measures

The Risks of Online Shopping

When you shop online, your biggest worry is probably whether or not the product will look as good in person as it does in the photos on the website. However, the risks of online shopping go far beyond product quality. In fact, online shopping, if done without proper precautions, can actually cause serious damage to your wallet and your life. This is made possible because the amount of information online retailers want from you far outweighs what you fork over when paying in person. Some of the information digital businesses collect about you may include:

• Your name
• Your home and email address
• Credit card information
• Your interests
• Your purchase and view history

Some of this information is harvested from order forms, which require you to fill out details for shipping purposes. Other information is gathered through the use of cookies, which are little bits of code stored on your device, that collect and share information about you. While some companies have started collecting only the bare minimum of information about you, or now require you to consent to its use for purposes other than shipping and billing, other companies simply take what they want. Their terms of use typically say that if you want to use their website, you agree to their terms. 

Unfortunately, the more information a website collects and stores about you, the more at risk you are. Here are the most common risks of online shopping:

Advertising

Most online retailers ask for your email address when you checkout. This allows them to send you a virtual receipt for your order. However, depending on the retailer, it also allows them to send you email advertisements, which is a violation of privacy, especially if there was no option to opt out of promotional emails. In addition, based on the purchase you make and the cookies a website uses, they may also be able to target you with ads on other websites based on your interests. 

Credit Card Fraud

If an online retailer doesn’t properly secure their payment gateway, it’s possible for a cybercriminal to hijack it. If this happens, they’ll redirect you away from the real payment page to one that looks identical. However, this page is only designed to steal your credit card information. In other cases, if a retailer doesn’t properly protect saved credit card information, it may be lost in a breach. You may not realize this has happened for months, or even years, until unexpected charges start showing up on your billing statements.

Identity Theft

Because your personal information is collected, along with your credit card information, cybercriminals can combine all this data to steal your identity altogether. Many people don’t realize this has happened to them until their credit card statements start showing unusual activity, or they realize their credit score has tanked.

Website Red Flags

Because ecommerce and online shopping is becoming more and more popular, many websites have started upgrading their security protocols and employing the strongest security measures possible. However, some sites still lag behind in that area. Fortunately, it’s sometimes possible to spot websites that you should never, ever purchase from. These are the red flags to look out for when shopping online:

It’s Poorly Secured

A decade ago, most websites used only the basics of cybersecurity. However, as websites have increasingly been collecting sensitive user information, this level of security is no longer strong enough to keep you safe. Instead, shop only on sites with SSL, or “secure sockets layer,” encryption. How do you know if a website has SSL encryption? There are two methods. First, look at the website address/URL. If it starts with HTTP instead of HTTPS, it is not secure; the extra ‘s’ means the website is protected with SSL. With the second method, many browsers include a lock icon next to the URL. An unprotected site will either appear unlocked, or without the lock altogether.

You’ve Never Heard of the Website

In many cases, the safest way to shop online is to stick to websites you’re familiar with. This can reduce the risk of both buying counterfeit products and encountering a poorly secured or altogether fake retailer. Of course, this doesn’t mean you can never branch out and find new retailers, but if you’ve never heard of it before, look for other sources who can confirm its validity. These sources can include friends and colleagues, business information bureaus, and trustworthy business review websites.

It Asks for too Much Information

Websites profit off of your purchases. They also profit off of your personal information. However, most companies need some amount of information about you in order to fulfill your purchases. So, where is the line between just enough information and too much? This can be tricky to determine, and often depends on the level of comfort you feel in giving away your information. However, a good rule of thumb is, if the information isn’t necessary to send you a receipt or ship your item, the website might not be trustworthy with your data. For example, details like your date of birth and gender are often irrelevant and may be a sign that a website is planning to abuse your information.

Payment Method Pros and Cons

When shopping online, one of the riskiest points in the entire process is during checkout. This is the point where you surrender not only your personal details, but your financial ones as well. The risk differs depending on the payment method you choose, as well. There are many different options, including credit and debit cards, PayPal and other third-party payment platforms, and gift cards. Here’s what you should know about each:

Credit Card Pros

Credit cards are the most common method for buying goods online. They’re quick, convenient, and many digital retailers allow users to save their card information for future purchases. The security they come with also makes them one of the safest ways to pay online. These are the main pros of credit cards:

• Credit cards typically have excellent fraud protection. If your credit card provider flags a purchase as suspicious, they can quickly and safely reach out to you to confirm if you made the purchase or not.
• Charges on credit cards are often easy to reverse. If you make a purchase on a website that you realize later likely wasn’t safe, or that never sends you your product, you can reach out to your credit card provider to have the charge reversed. You can also have fraudulent charges reversed as well.
• Cancelling a credit card is easy. If your card information falls into the wrong hands, cancelling the card can be done immediately and safely, with no damage to you as long as the danger is discovered quickly.
• When you use a credit card, you don’t pay up front. Instead, the card provider will issue the funds and you pay off your bill at a later date. This is great for ecommerce, especially because items often do not arrive the same day you purchase them. Using a credit card allows you to receive and check the product before paying for it, so you can cancel the charge (or get it refunded) before actually paying from your own pocket.
• Because credit cards are one of the most popular payment methods in the world, many ecommerce companies put extra emphasis on making sure those transactions remain safe.

Credit Card Cons

No technology or, indeed, payment method, is without its flaws. That includes credit cards. Some of the cons of using credit cards to pay online include:

• If you often have recurring charges on your credit card (for example, subscriptions, phone payments), accidentally having your card information fall into the wrong hands becomes a hassle. You have to cancel it and switch all recurring payments to the new card.
• Using a credit card online requires you to give your name and card details as well. While it’s a mostly safe method of payment, data breaches can happen, which puts your personal information at risk.
• Some companies automatically save your credit card information in your account (if you don’t opt out of doing so). While that makes your next purchase more convenient, it also means that if your account is ever hacked, the person who did the hacking also has access to your credit card.

Tips for Using Credit Cards Online

Fortunately, it’s possible to mitigate any risks that come with using a credit card online. These tips can help:

• If you don’t trust a website fully, choose a payment method other than a credit card.
• If you make online purchases frequently, consider getting a separate credit card to use exclusively for those purchases. You can easily track your spending on just that card, and also avoid having to change your billing information for recurring payments if the card’s information is compromised.

Debit Card Pros

Your debit card is also the card used to directly access your bank account. Using it to pay allows you to draw funds directly from that account. This method of shopping online has many pros and cons. The pros include:

• Debit cards are a quick way to pay when shopping online by directly drawing funds from your bank account. You don’t have to worry about debt or tedious applications; if you have a bank account and money in it, you can use your debit card for any purchase you want.
• Most (but not all) debit cards offer “zero liability” protection, similar to what credit cards offer. Check with your bank to learn the details of your card.

Debit Card Cons

While debit cards are convenient, there are slightly more cons associated with using them than there are pros. They are generally not the safest way to buy online. The cons of using debit cards include:

• Your bank account directly links to debit cards. If your card information is stolen, it can be used to drain all of your money very quickly, and without permission.
• Fraud protections on debit cards do not work as fast as credit cards. If you realize someone is making unauthorized purchases from your account, you may have to wait up to 10 days for the bank to begin handling the problem. It’s possible you may never get your money back at all.
• Not all online retailers accept payments made with debit cards.

Tips for Using Debit Cards Online

This is what you should know about using debit cards to shop online:

• In general, it’s best not to use a debit card for an online payment.
• If you must use your debit card for an online purchase, set up alerts on your bank account so you see every purchase made, whether it was made by you or not.

Gift and Pre-Paid Card Pros

Many of us receive gift cards or pre-paid credit cards as gifts for birthdays and holidays. While the money on them is limited, they’re one of the safest ways to shop online. Here are the main pros of gift and pre-paid credit cards:

• Most pre-paid cards are a more anonymous way to pay online than with a credit or debit card. You can buy ones for large retailers at your local grocery or convenience store (or your bank for pre-paid credit cards) and even pay in cash for them, so they don’t infringe on your privacy whatsoever.
• Shopping online can be addictive and pre-paid cards are a great way to set yourself a limit and stick to that limit.
• Because the cards have a set limit on them, even if you lose the card or someone else gets ahold of the number on the card, there’s a hard limit to what they can spend without your knowledge.

Gift and Pre-Paid Card Cons

The cons of using a gift card or pre-paid credit card to pay online include:

• Unfortunately, not all retailers accept pre-paid cards or offer gift cards to use on their website. This may limit where online you’re able to shop.
• Unlike with other payment methods, some pre-paid cards come with extra fees (for example, an activation fee), so you have to weigh that knowledge before choosing to use this payment type online.
• If the card accidentally falls into the wrong hands, there are very few protections on them. Any money lost may be difficult or even impossible to get back.

Gift and Pre-Paid Card Tips

• If you plan to use a pre-paid card, check the retailers you intend to buy from first to ensure they accept that method of payment.

Third-Party Service (PayPal) Pros

PayPal is one of the most popular payment methods in the world. Almost all retailers offer it as a payment option and those who do not yet will probably do so in the future. There are other third-party payment services in existence, although they have yet to find the same foothold. The pros of using these services to buy online include:

• The greatest benefit of using a third-party payment service like PayPal or Google Wallet is that you reduce the number of places your banking information exists online. Instead of giving it to every retailer, the information is kept on a single site that other retailers can no longer access after a transaction is complete.
• Some services also offer “buyer protection” to compete with credit cards. They make it easy to dispute and resolve a charge should an issue arise.

Third-Party Service (PayPal) Cons

Like with anything, these services come with cons. They include:

• In the event of a dispute between you and a seller, some third-parties may freeze your account while they investigate. This means it can’t be used for further purchases until the issue is resolved.
• Because you can connect banking information to some third-party services, a hack of their service leaves you at risk.

Third-Party Service (PayPal) Tips

• If given the option, connect your credit card to a third-party service instead of your banking information. This not only allows you to dispute charges twice (once with the payment service and again with the credit card provider if needed), but it also reduces the risk of valuable banking information being stolen.

Extra Online Shopping Security Measures You Can Take

Aside from choosing the safest way to purchase online, you can take extra precautions when shopping digitally. These precautions include:

• Only shopping on SSL secured sites. Above, we discussed how to determine whether or not a website uses SSL security. If it does not, do not, under any circumstances, give them your payment information.
• Use a private VPN, especially in public. VPNs keep you anonymous online and encrypt your activity, so snoops can’t see what you’re doing. Using one when you shop online adds an extra layer of protection to your data. This is especially important if you’re on public wi-fi, because public networks are typically unprotected and allow any user to see what others are doing.
• Use strong account passwords. If you allow an online retailer to store your credit card information in your account, always protect that account with a strong password. This can help prevent a hacker from gaining access to your information.

While there are several payment options that are great for making online purchases, not all are created equal. They all have benefits and drawbacks. At the end of the day, it’s up to the user to decide which method works best for them.

To further protect yourself while shopping online, use a VPN to encrypt all of your transactions, shop on sites you’re familiar with, make sure they use SSL encryption, and protect your accounts with strong passwords.