• Navvir Pasricha

Online v In-Person Payments - Which is safer?

Its 3 pm and you still have not gotten the call you have been waiting for all day. You find yourself taking breaks between zoom calls and refreshing the same website time and time again. You feel your anxiety levels hitting a peak as you realize that you have spent your entire day waiting. Then, it finally happens. Your phone rings, you pick it up and the person on the other side of the telephone wants to confirm you are home. You snap back ‘yes I am home right now’. They inform you that they will be at your house in the next 10 minutes to deliver your package. 15 minutes later, a van pulls up and you rush outside to pick up the package you have been waiting for all morning. You hurry back inside, grab a blade rip open the wrapper to unveil your brand new toilet brush.


The scenario above has applied to almost everyone be it a new computer, a new pair of pants, a new squeaky toy for your pet, detergents or yes, even a toilet brush. We have all started buying more things online now than ever before. This may be due to the increased diversity of what is available or the fact that we, as a society place a premium on the convenience of online shopping. ‘Whadda mean or?’ some might say and those people are right - online shopping has, for whatever reason, become ingrained in our lives.


Yet there is always a sense of concern when doing online shopping. Concern that the item might be broken, wrong, dead on arrival or that it just might not reach at all. The common theme is that we are concerned that we will suffer a financial loss, regardless of the reason. It is for this same reason that a good number of people have yet to embrace online shopping. They are concerned that sending their payment information over the internet opens them up to having their information stolen.


However, if one was to take a step or two back and look at payment systems as a whole, one might realise whilst there are some risks to using electronic payment methods, the industry is, as a whole well regulated and safe.


Then, why do people fear using online payments?


It is quite simple - it is because they hear about it in newspapers, on social media and via Whatsapp forwards. Yet, in most of these situations, the victim is either an elderly person or someone who fell for a ‘love scam’. These are human interest pieces rather than reports about the state of actual fraud. These stories make for exciting reading and so they continue to be churned out by journalists who (inadvertently) give the impression that online payments are just not safe.


The reality is that there is a multitude of ways that in-person payments can affect regular people. For example, some merchants utilise what is known as a virtual terminal these terminals are embedded into the merchant’s computer essentially meaning that a customer’s payment. These details need to be manually entered into the terminal before a payment can be processed this enables the merchant to write down the credit card numbers for unauthorised use at a later time. This technology is offered by ipay88 in Asia but is more prevalent in ‘western countries’ with many companies like square and even razor offering them to smaller merchants.

Another way that credit card fraud can be perpetrated in person is via the use of skimmers. These little black items found on ATM and the phone lines of credit card terminals. These items record all data transmitted via the phone lines including credit card numbers. Most of the time this information is sold on to fraud syndicates who use it for mass attacks on specific merchants.


This fraud exists yet it is not commonly reported in the mainstream media only because it is ‘boring’ and a lot of the time there are many victims removing the human interest element and therefore the excitement value.


So should I just use cash as payments instead?


Consider the threat of diseases such as E-coli, Covid-19 and Salmonella, all which have been found on paper money. Factor in the fact that walking around with large amounts of money makes anyone a prime target for a robbery and the inconvenience factor of paying for your new TV in cash. Does that seem any safer than credit card payments to you?


Rather than looking for a way of payment that has 0 risks, we should appreciate the fact that credit card companies are constantly looking at ways to improve transaction security. Take the implementation of 3D-secure for example. It reduced the threat of unauthorised transactions by requiring a one-time password to be entered every time a payment was made online. While this increased the inconvenience factor, most users accepted it as they knew that it was a matter of safety. Credit card companies understand that fraud and risk are ever-evolving and they are implementing new processes to stop fraud. For example the creation and hopeful soon implementation of 3DS 2.0 means that credit card companies and banks will use a user’s actual transaction history to determine how likely it is that a transaction was authorised by the user. If the transaction fits the user’s profile, the transaction is authorised. If the transaction is not part of the user’s normal spending behaviour, the user would need to complete the 3DS process.


Yet the innovation does not stop at online payments. To combat cloned cards used for in-person payments, banks have started utilising risk engines that provide longitude and latitude of each transaction. This information, coupled with some basic AI enables issuing banks to identify transactions that have been performed using cloned cards, thus reducing the effectiveness of skimmers. Sometimes products that have higher risk factors are simply just phased out such as virtual terminals in its place, merchants are offered the use of QR barcodes to receive payments instead. These have the added security feature of moving funds from within the payment processes own network rather than pulling funds from a credit card ensuring higher levels of safety for both the user and the merchant.


But I am still afraid.


It's not a bad thing. If you find yourself still afraid, here a few tips you could use to alleviate your concerns.


1. Look at the website you're making a purchase from.


Websites like Lazada, Shopee, Amazon, eBay and Zalora have too much to lose by not having a proper risk mitigation system. This should provide some comfort when making purchases from larger merchants. Even if you are to have some financial loss, these merchants are big enough that day could reimburse you for financial loss anyway.

2. Remember, if it smells like a fish, and it looks like a fish, it's probably a fish.


The logic here is simple - if it seems like it is not 100% safe, assume that it is not, and act accordingly. While this might be an overly cautious approach, it will no doubt, keep you safe.

3. Always use the proper channels.


If a seller asks you to bank in money into their account rather than pay them upon delivery or pay via credit card, proceed with extreme caution. Insist that the person provides you with proof of identity such as a picture of their ID card before making a bank transfer. Remember - if you initiated the bank transfer, all liability is on you and no bank will reverse the transfer because you initiated and approved it.


What do you think? Are payments getting safer in 2021? Let us know in the comments section below. If you have further questions or if you just want to talk more about how you can protect your credit card information, feel free to contact us.


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