Credit
card is an extremely convenient option for paying
as well as receiving small value payments over
Internet. Anyone can install a payment gateway
system for receiving payments from overseas buyers
for sample or even small shipments. However, is
it safe ? We discuss safety angle first.
Contrary to popular belief - credit card is a
much safer payment option than cash or cheque,
provided you follow certain safety rules. Its
like motor driving - there's always risk of accident
but sticking to traffic safety rules minimizes
the risk significantly.
The Real Question - How Safe is it for Internet
?
Frauds relating to credit card is nothing new
- it happens everyday in off-line world. It has
been around as long as credit cards are in circulation
and in all probability will exist so long as credit
cards do in their current form.
So, the real question should be - is it safe
to use credit card in Internet ?
Let us examine the special threats that exist
in online world only and how to counter them.
Anonymous World of Internet
Much has been written about anonymous nature
of Internet that guarantees freedom of expression
and at the same time provides a convenient cover
for scamsters and con artists to hide behind.
So, if you are gullible enough to hand over your
credit card details to an unknown person or use
as insecure a medium as e-mail to convey it -
its as good as inviting scamsters to rip you.
After all, you do not hand over your credit card
to strangers - then why should you do so on-line
?
The question - how to ascertain identity before
handing over credit card details ?
Secure Payment Gateway
General web-sites send and receive information
through public channels that anyone with little
knowledge of Internet can trap and 'listen' to.
Secured sites send and receive information in
encrypted form so that even if trapped - deciphering
the encrypted information is not easy.
So, a web-site that wants to accept credit card
MUST BE secured. You can make out if the web-site
is secured or not from your browser - if you see
a padlock at the bottom right or left hand side
of your screen, this denotes that you are on a
secure server.
Credit card accepting web-sites should have security
certificate from an accepted third party authority
like Verisign. A Verisign certified secured site
is generally considered safe enough for on-line
credit card transaction.
The other component of the site is 'payment gateway'.
Its a software that accepts and verifies credit
card details with credit card issuing bank. We
shall discuss about it in detail in forthcoming
issues.
Threat of Identity Theft
On-line credit card payment is extremely convenient
- all that's needed is the credit card number
and date of birth. Neither physical presence nor
signature is required for transacting on-line
- making it an easy prey for identity theft.
So, anyone who has access to your credit card
number and date of birth can use your credit card
to defraud you - right ? Wrong ! In most cases.
Perhaps the above was true few years back - but
not anymore. Many payment gateway providers have
developed sophisticated techniques to detect on-line
frauds and can prevent many such threats. The
fraud detection engines are still evolving, the
systems are not fool-proof - but it now requires
much greater degree of sophistication on the part
of fraudster to commit on-line credit card fraud.
Extra Protection Against Fraud
Perhaps you do not realize it, but shopping with
credit card is actually safer than paying by cash
or cheque. In the event of a fraud or even bad
delivery - consumer can ask his/her bank to stop
payment. In technical jargon, it is called 'Chargeback'
- where the credit card company removes the purchase
from consumer's bill and the merchant is not paid.
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