Payment Processors – How Safe Is Yours?

Whilst credit cards are arguably the safest means of making online purchases due to their built in protection guarantees, there are other means of processing online payments that offer ease of use and compatability benefits.

But are they safe?

is your payment processor safe?

Here’s a look at a few payment processor alternatives and their inherent advantages and disadvantages –

Paypal:

The main benefit of paypal is compatability with the online auction site eBay. Developed by eBay to simplify payments through their site it is also commonly used for trading goods and services all around the internet, both on websites and through webmaster forum transactions, etc. Fraud protection is variable – you are covered when dealing with “verified sellers”, otherwise you are very much on your own. Additionally, paypal often tends to side with buyers in disputes, meaning that sellers can often find themselves out of pocket when they buyer is a scammer. Also, for sellers, paypal’s fees can quickly mount up. They even charge to send money from one paypal account to another.

Credit Card:

Credit cards are freely available and possibly offer the most protection with most issuers offering the ability to initiate “chargebacks” for transactions that have gone wrong. Some even offer free fraud protection insurance or waive unauthorised debits completely. The downside is that many online merchants still do not accept credit card payments, at least not unless one of the third party payment processors. Also, be careful when giving out credit card details online due to the risk of credit card fraud and identity theft.

Western Union:

Western Union is set up for sending money to people you are already familiar with, NOT merchants or other strangers! They offer ZERO protection in the case of fraud. Around the world, Western Union payments can be withdrawn with no proof of identity! This makes them the scammers’ payment processor of choice.

If you send payment through Western Union to someone you don’t know then consider it gone! Western Union is not designed for making online payments!

Cash, cheques and postal/money orders:

With the exception of cheques, these are as good as cash to whoever has them in their possession, be it a genuine person, scammer or postal thief. Fraud protection is nil and the chances of you getting your money back if you are scammed is negligible. Remember – scammers have access to fake names, addresses and bank accounts. BEWARE.

Escrow services:

If the Escrow service you are using is genuine then fraud protection for buyers is pretty well 100%. Items are forwarded to buyers who then get the opportunity to approve them before the Escrow company releases the funds. However, in reverse, the protection offered to sellers is very low where there is buyer fraud, there are fees to pay and up to a 2 month wait to receive payment from the buyer. The most worrying trend with Escrow services is in the number of fake ones springing up. The scammers, realising people were wisening up to them, started creating their own Escrow services which are obviously not going to offer you any protection whatsoever! Therefore be sure to use a trusted and well known service such as escrow.com.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.

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