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Are Your Online Financial Transactions Safe?

Be sure to do your own research before adopting a specific payment method as the information is subject to change. 

As more payment information become digital, many of us are wondering how safe it is.  If you were not the primary financial person in your last relationship, it can be even more daunting. Below are insights into these payment methods. Be sure to do your own research before adopting a specific payment method as the information is subject to change. Be sure to do your part in keeping your data safe.

  • Don’t save your passwords on your browser
  • Use strong passwords, and be sure to change and update them often
  • Update your phone software regularly, as well as your computer virus protection programs
Wireless payments

Helpful terms to understand:

  • Encryption/Decryption – This is the process in which readable data entered online is converted to an unreadable from to prevent unauthorized persons from reading it.  Decryption converts the encrypted data back to readable data to be used by the intended recipient.
  • Firewall – It is a network security system that monitors incoming and outgoing network traffic and permits or blocks data coming in based on programmed rules for data handling.
  • Two-Step Authentication – Just as it sounds, when two step authentication is in place it requires the user to prove who they are in two ways.  Typically logging in is one step. The second step may involve answering a security question, or entering a code sent to the user via an email, text or phone call.  This method has been used by the IRS, State DMVs, as well as banking institutions.
  • HTTPS – Hyper Text Transfer Protocol Secure.  This is a website certificate issued to show that a website is safe and is using SSL.
  • SSL – Stands for Security Socket Layer.  SSL works by ensuring that data transferred between users and websites, or between two systems is encrypted as it is transmitted and is only decrypted when it reaches the intended recipient.
  • Mobile Wallet – A virtual wallet that stores payment information on a mobile device. Examples are Apple Wallet, Apple Pay, Samsung Pay, Google Pay and Pay Wallet. Typically credit card information isn’t passed directly to the vendor, store or online payee.
  • Token – A token replaces debit or credit card data with a unique identification code which is a string of randomly generated numbers, which is used for digital transactions. Online transactions are then more secure because the card data is no longer shared.

1.      When making purchases online regardless of the payment service, consider using credit cards instead of debit cards

Credit Card laws, limit your liability to $50 for unauthorized charges. If you have your physical credit card (it hasn’t been lost or stolen) you aren’t liable for any charges. Credit cards also offer strong purchase protections if an item is damaged or stolen.  You can also dispute a charge based on the condition of the item when shipped to you. These protections make it the most appealing method for online payments.

…before using any digital payment system, know how your information is stored and ensure that the transactions are encrypted.  

Debit cards remove the money from your account. If your card PIN is lost or stolen, you must notify your bank within two business days to limit your liability to $50 or under. (“Credit Cards vs. Debit Cards: What Should I Use? | WTOP News”) After two business days you could be responsible for up to $500 in fraudulent charges. This includes ATM transactions, bills and auto payments. If you wait more than 60 days, you might be responsible for any transactions after the 60 day mark.

2.      Bank account based transactions

Banks are one of the safest online financial transaction centers.  Typically, in addition to getting balance information, and performing transfers between accounts, most banks offer an account-based bill payer service.  Security is critical to online banking. Most banks use up-to-date programs to prevent malware and viruses from spreading. Firewalls block unauthorized access and stop traffic from unsafe internet sources.  Here are steps for you to keep online banking safe:

  • Don’t sign into your bank records on public computers or Wi-Fi
  • If your bank offers 2 factor authentication set up your account to use it
  • Update your phone software regularly, as well as your computer
  • Don’t use email links to log in to your bank account, type in the address or bookmark it for convenience
  • Monitor your account often

3.      Mobile Apps and/or payment services

There has been some skepticism about using mobile payment apps.  Some people have assumed that the information is stored on the phone, but storage types vary from platform to platform and are not saved on phones. Utilizing these services for processing payments can minimize the number of retailers who have your credit card information. Instead of providing it for every online transaction, you can use one of the apps/services. Let’s look at the big four: Google Pay, Amazon Pay, Apple Pay and PayPal

Google Pay can be used online and in real life. It works in phones using Android operating systems.  It also allows you to use credit, debit cards and bank accounts in conjunction with your phone. Google stores your card details on its secure servers protected by firewalls. The information is not shared with other businesses. They get only the information they need to process the transaction. This includes a unique identification code, AKA a token, which is transmitted when checking out. Google also uses SSL to encrypt your data.

Amazon Pay is an online payment system. It uses the payment method information that is in your Amazon account.  Look for the “Amazon Pay” choice when checking out.  You must sign into your Amazon account, which also can then allow you to select any shipping address already associated with your account. Amazon doesn’t share your full payment information. The merchant only receives the information needed to complete and support your transaction.  This may include your name, email address and shipping address. (“Lenovo Privacy Statement | Lenovo US | Lenovo US”) (“Lenovo Privacy Statement | Lenovo US | Lenovo US”) Amazon uses SSL to protect your entered credit card data. The data is encrypted and requires two keys to decode your information. Anyone intent on stealing your data will not have these keys.

Apple Pay can be used online and in real life. It works in conjunction with Apple Wallet and allows you to use credit, debit cards and bank accounts in conjunction with your iPhone.  Add the information to your Apple Pay on your phone – you can even scan the credit card with your camera to set it up. It works only on Apple devices. 85% of retailers will take Apple Pay – unfortunately Amazon is not one of them. Apple doesn’t store your card numbers on your device or on Apple servers.  It uses a device specific number and creates an exclusive transaction code.  Businesses only get the information they need to complete your purchase.  It may include your name, email address and shipping address, but NOT your full card information or bank number. It’s contactless, germ free. Apple contacts the issuing bank directly and receives a card specific token.

PayPal is the one of the most widely used payment system online payment system. PayPal encrypts all transaction using SSL. It also does server checks to ensure customers are using approved browsers. Additionally, it never exposes credit card numbers or bank information. Accounts also offer two-step authentication for added safety. Credit card information is tokenized and stored in an online vault.  PayPal has been around since 1999.

Summary

Online, or mobile payments are convenient and are being adopted more and more. Before using any digital payment system, know how your information is stored and ensure that the transactions are encrypted.  Do your part by protecting your information, protecting your passwords, and your personal internet devices. Change your passwords regularly. Don’t use the same password for multiple accounts.

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