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The truth about online payment methods and who carries the risk

Online purchasing can become a confusing process for some shoppers - from finding the online store, to choosing the right product and then having to decide on which payment method to use.

Although there are different online payment methods available, with Internet fraud being covered extensively in the media, it sometimes seems like it is just not worth the effort. But let me assure you - it really is!

As an online shopper, you are not at risk when it comes to Internet fraud. I know that this is difficult to comprehend but hopefully with a better understanding of how online transactions really work, what risks are involved and who carries them, you will regain the confidence to continue with your shopping spree!

Different online payment methods

There are three types of online payments available. Credit card payments are the most popular, followed by Internet transfers and third party payments. An Internet transfer is where you pay directly through your online banking system into the online store's account. A third-party payment involves a third party such as a bank, eBucks, Icanonline or Autopay, which enables you to make a payment directly into the online store's bank account. Although similar to Internet transfers, third party payments occur at the same time that you make your online purchase.

From a shopper's point of view, each payment method has its advantages and disadvantages, but regardless of the payment method used, a shopper does not carry any risk when it comes to online fraud.

Credit card

Paying by credit card is probably the least understood payment method. It is very easy to be misled as to where the risks lie in using your credit card online. When you give the online store your credit card details, it is more secure than giving your credit card to a waiter in a restaurant. Just giving the online store your credit card number is not enough for them or anyone else to start processing payments for which you will be liable.

In most cases, the risk of the credit card transactions failing lies with the online store. The reason is simple: the online store does not see the credit card and so cannot verify the shopper's identity or signature. This means that should the transaction fail, the bank requests the details of the transaction from the online store. If the online store cannot provide enough evidence that a shopper made the transaction, the bank will remove the money from the online store's bank account and reimburse the shopper. Online stores protect themselves from this eventuality by doing credit checks on their shoppers, telephone interviews or requesting identification on delivery.

Internet transfers

An Internet transfer is one of the easiest ways to make a secure payment and your details are kept confidential. Fraud is impossible when you pay directly from your bank account into the online store's bank account. From the online store's point of view, once the money is in the bank, they are no longer at risk.

With most transactions, it is important to make sure both parties are legitimate. If a shopper finds an online store but has no way of verifying that it is legitimate, then my immediate reaction is: do not do the transaction. Although the website may offer a cheaper service or product, there is a greater chance that you will not receive your goods if you cannot verify that it is legitimate.

The most important advice I can offer potential online buyers is to check that there is a contact number on the website. An easily accessible phone number is a good indicator of how serious the online business is about customer service. If there is no phone number, it will be difficult to follow up on any enquiries. If the phone number is a cell number, do not make the transaction. The reason for this is that it requires no personal information to acquire a cell number and there is no address associated with it. In most cases, a cell number should ring an alarm bell for fraud.

Third-party payments

Third-party payments require a shopper to set up an account beforehand with the third party vendor. A good example is eBucks where a shopper registers with eBucks and is then able to shop at any website where eBucks has enabled the online store, which shows that eBucks considers that online store to be legitimate. The shopper can then go through the normal purchasing process with the online store but when it comes to payments, the shopper will be taken through a few screens which will 'tell' eBucks to process the payment. Now the transaction is complete for the shopper. The online store feels safe it can process the order without delays.

Shop with safety

Online shopping can be easy, fun and safe. I have been an online shopper for years and to date I have not experienced any serious problems. Often the best deals can be found on the Internet and there are many online stores that are hungry for your business and are willing to go the extra mile to make sure that you have an enjoyable and safe shopping experience. Give them a try!

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