Michael Reynolds in General on Tuesday, January 12, 2010
E-commerce has been around for a while now and to most of us, it is a normal way of shopping and purchasing products. However, I occasionally encounter someone who is uncomfortable using a credit card online. I’d like to clear up some misconceptions and provide some insight into what happens when you use a credit card online and why it’s safer than using your credit card at a gas pump.
First off, keep in mind that when you buy something online with a credit card, your credit card number is typically not ever seen by a human. When you type in your credit card number, you are entering it into a page that is encrypted so that even if someone were electronically eavesdropping, he/she would not be able to acquire the number.
Once you click the “buy” button, the order information, along with your credit card number, is sent directly through an encrypted connection to a merchant gateway (like Authorize.Net) which checks the validity of the card, available funds, and tests for fraud. If all goes well, the transaction is complete and the money is batched to go from your credit card to the bank account of the merchant from which you purchased. All this happens within seconds and with no human intervention. As you can see, there is really no realistic opportunity for anyone to see your credit card number.
Contrast this with other ways that we use credit cards every day. We swipe our credit cards at gas pumps which leaves us vulnerable to skimming. We hand our credit cards to servers at restaurants, which leaves us vulnerable to anyone in the back of the restaurant with a camera phone. We withdraw money at ATMs, which leaves us vulnerable to both skimming and photo espionage.
There are so many times that we offer up our credit card number in the physical world that are much riskier than purchasing online. Yet, sometimes we feel that buying online is mysterious and scary and so we feel unsafe. Purchasing online is typically much safer than a physical card purchase.
Remember that when your credit card is swiped at a store or restaurant, it’s going through exactly the same type of network as it does on the Internet. The only difference is that in a store or restaurant, a human gets to see your credit card number. Which sounds safer?
Some things to look out for when purchasing online:
1. Look for the “s” in “https://”. If you are on a secure site, the address in your location bar at the top will start with “https://”. Notice the “s”.
2. Make sure you trust the website. Amazon, Zappos, and Apple are all big companies with trustworthy websites. Buying from ugly, mom and pop websites that look like they were designed by your neighbor’s 5-year-old may not be all that safe. Make sure you have some level of trust with the merchant. Feel free to call them and ask how they handle e-commerce and what gateway they use.
3. Use a credit card, or use your debit card as a credit card. This ensures that if theft does occur, you are not liable for it and it does not deplete your bank account.
Though purchasing online may seem a little scary to some, it’s actually much safer than physical card purchases. If your credit card number is stolen, it’s much more likely that it occurred at a gas pump, restaurant, or through documents in your trash. Remember to shred often, be cautious about where you use your card, and look for the signs of a secure transaction and you will minimize your chances of being a victim.