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March 26, 2021

Which is safer online: PayPal, debit or credit?

Where the security of online shopping is concerned, we’ve come a long way.

Seems like just yesterday my parents were – more than a decade ago but at a time when the Internet was in its relative infancy – equal parts confused and cynical over using their Visas online.

Now? People throw their credit card numbers around willy-nilly, rarely concerned over the consequences simply because it never happens to us. Online shopping fraud isn’t totally uncommon, but unless we get nailed, we’ll still happily plug in our verification codes wherever prompted.

There is value, though, in discussing which methods of online payment are the safest.

Some 92 million people bought things online last year, and most spread their purchases over three payment methods: credit card, debit card and third-party services like PayPal.

And the New York Times has broken down the security wherewithal of each. They rank, by my estimation, in this order:

3) PayPal, etc.

Using a service like PayPal is great when you shop from a site with less-than-reputable security measures. It acts, essentially, as a buffer between your credit card and that online Turkish merchant who sells Chanel handbags for $40 each. Yet, while the act of using the service is sound, if your PayPal account itself is hacked, you’re largely void of recourse. According to the Times, it’s markedly harder to track fraud through your PayPal account than it is when your credit or debit card has been used. Many times, what is stolen here – however atypical of an occurrence that may be – is lost forever.

2) Debit cards

When a debit card is used online, consumers are generally covered against fraud as long as they catch it quickly. If you’ve paid with debit and your info has been compromised, your liability is much lower if you report the crime within two business days. Wait longer and there’s less the bank will do for you, but generally if fraudulent transactions are called in within two months, you’ll be covered for the majority of your loss.

1) Credit cards

Credit cards win the online security war because of a two-tiered attack. For one, most Canadian banks will reimburse and wipe clean 100% of bogus charges on your card if you report it quickly. And if that’s not enough, there is the method of using a one-time credit card. For an activation fee of about $6, consumers can load up a single-use credit card – available from most Canadian banks and cheque cashing stores – to use online to create another layer of protection. Only loading up the amount of a purchase to your card each time shields even the savviest crook from accessing more of your money.

Tell us: which method of payment do you feel safest using online?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...