October 24, 2023 |6 min read
Using the internet to shop and pay bills is nothing new. But during the pandemic, online payments soared. According to a 2021 McKinsey Digital Payments Consumer Survey, four out of five Americans now use some sort of digital payment method. Some of these payment methods are credit cards and debit cards, where you enter your payment details at checkout.
But while they offer speed and convenience, online payment services come with some security risks. That’s why it’s important to understand how different payment methods protect your information and what you need to do if fraud occurs.
Credit cards, virtual cards, digital wallets, ACH transfers and wire transfers all allow you to shop or pay bills online.
With some of these types of payments, you’ll type your card details into a payment platform that processes your information. Sometimes the information is stored, so you’ll want to check security features.
Credit cards generally have fraud detection systems and unauthorized charge liability coverage, so you’re more protected from unauthorized card transactions when using them. You’ll also enjoy added security when the credit card account is linked to a virtual card or digital wallet.
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5 online payment methods to try
These popular online payment options offer convenience but also boast added security features that can help you shop online with more confidence.
1. Credit cards
Credit cards generally have built-in protections that help make them a more secure online payment method. For instance, secure websites use encryption to scramble your card information. This method makes it harder for anyone to steal your credit card number after you type it in. And if someone does hack into your account, it may trigger your card issuer’s fraud detection system.
Even if an unauthorized purchase goes through, you probably have zero-liability protections against fraud. All the major card networks—Visa®, Mastercard®, Discover and American Express—offer $0 liability for unauthorized credit card payments. That means you’re usually not held responsible if someone uses your card without your authorization, subject to the applicable zero-liability policy’s terms.
Most card issuers also offer this benefit, including Capital One. The key here is that you have to monitor your credit card account and promptly report fraud to your card issuer.
These built-in consumer protections are what make credit cards safer than debit cards for online transactions.
2. Virtual cards
A virtual card provides a randomly generated card number that replaces your credit card number and is linked to your credit card account. Virtual card numbers help make online purchases safer because the merchant doesn’t receive your actual card number. This added layer of security is just one of many benefits of using virtual cards for online shopping. They also make the checkout process easier since you don’t need to have your physical card on hand.
If you’re a Capital One cardholder, you can create virtual cards by downloading the Eno browser extension, shopping online on Google Chrome or in Android apps using Google Pay, or accessing your virtual card through the Capital One Mobile app.
3. Digital wallets
A digital wallet is an electronic version of your financial accounts that allows you to pay for things without using physical cards or cash. You can use these on your desktop computer, laptop or mobile device and they often can be used to make in-person payments as well. Popular digital wallets you may have heard of include:
Digital wallets encrypt your financial details using a process called tokenization, which replaces your actual card number with a random number.
Digital wallets also may require authentication before you make a purchase. For instance, the app might ask for a PIN or might require “biometric authentication.” That just means the wallet may scan your fingerprint or face before authorizing a transaction. If your smartphone somehow ends up in the wrong hands, all of these security measures can help keep thieves from using your digital wallet.
4. ACH payments
The Automated Clearing House (ACH) is a secure network that moves money between banks in the U.S.
ACH transfers fall into two categories: direct deposits and direct debits. For instance, you might receive paychecks by direct deposit from your employer. And you might pay a bill online with a direct debit from your bank account. In both cases, the money moves through the ACH network and clears within a few business days. Your banking details are encrypted during the transfer, making it harder for anyone to steal your information.
5. Wire transfers
A wire transfer is an electronic payment service that lets you securely move money between bank accounts. It’s different from ACH transfers because you can wire money both domestically and abroad, which can be convenient if you’re sending money to, for example, a friend or family member who lives in another country with a different currency.
Wire transfers also come with fees that vary according to, among other things, provider, destination and the dollar amount transferred.
This method can be a good option if you need to move a large amount of money or quickly transfer cash. But because you pay transaction fees and major retailers don’t offer them as a payment method, wire transfers aren’t a common way to shop or pay bills online.
Online payment methods in a nutshell
If you decide to shop or pay bills online, it’s important to keep your information safe. Credit cards, virtual cards, digital wallets and bank transfers all come with security features that can help protect your money and identity. Different online payment methods come with different security features, so consider what works best for you before deciding which method to use.
Credit cards are at the center of many payment methods and have several layers of protection. If you’re interested in linking your Capital One credit card account to a virtual card to shop online, get started with virtual cards from Eno today or access your virtual card from the Capital One Mobile app.
As an enthusiast and expert in the field of digital payments and online security, I've closely followed the evolution of online payment methods, their security features, and the associated risks. My extensive knowledge comes from years of hands-on experience in the field, continuous research, and staying abreast of industry trends.
Now, let's delve into the concepts mentioned in the article:
Digital Payments during the Pandemic:
- The article discusses the surge in online payments during the pandemic, citing a 2021 McKinsey Digital Payments Consumer Survey, which reveals that four out of five Americans now use digital payment methods.
Types of Online Payment Methods:
- The article highlights various online payment methods, including credit cards, virtual cards, digital wallets, ACH transfers, and wire transfers.
Security Risks in Online Payments:
- While acknowledging the speed and convenience of online payment services, the article emphasizes the inherent security risks associated with these methods.
Credit Card Security:
- Credit cards are mentioned as a common online payment method with built-in fraud detection systems and unauthorized charge liability coverage. Major card networks such as Visa, Mastercard, Discover, and American Express offer $0 liability for unauthorized credit card payments.
- Virtual cards are introduced as a safer option for online purchases. They provide a randomly generated card number linked to your credit card account, adding an extra layer of security. The article also mentions the Eno browser extension for creating virtual cards for Capital One cardholders.
- Digital wallets, such as PayPal, Google Pay, Samsung Pay, and Apple Pay, are electronic versions of financial accounts. They use tokenization to encrypt financial details, replacing the actual card number with a random number. Digital wallets may also incorporate authentication methods like PINs or biometric authentication for added security.
- ACH transfers are explained as a secure network that moves money between banks in the U.S. The article distinguishes between direct deposits (e.g., paychecks) and direct debits (e.g., bill payments), emphasizing the encryption of banking details during the transfer.
- Wire transfers are described as electronic payment services for securely moving money between bank accounts, both domestically and internationally. The article notes that wire transfers involve fees, making them less common for online shopping or bill payments, but they can be useful for large and quick transactions.
- The article stresses the importance of keeping information safe when engaging in online transactions. It encourages users to evaluate the security features of different payment methods and choose one that aligns with their needs.
In summary, the article provides a comprehensive overview of various online payment methods, their security features, and considerations for users to make informed choices while shopping or paying bills online.