Safest Online Payment Methods In 2024 (2024)

The 4 Safest Online Payment Methods

While electronic payment methods have made global ecommerce more convenient, they may also expose users to cybercrime risks, including identity theft and payment fraud.

In 2023 alone, data breaches globally cost an average of USD 4.45 million and affected over 353 million individuals. Given these risks, securing online payments is essential, whether you’re buying or selling.

In this article, we’ll explore the top 4 most secure payment methods and why they are a good option to help you safeguard your online transactions.

While online payments are fast and convenient, they attract significant risks for businesses and their customers. If the payment process is not secured, unauthorized parties can access sensitive information, such as credit card details and account credentials.

With cybercriminals stealing over 8 million data records worldwide at the end of 2023, personal information security is one of the biggest concerns for consumers when choosing an online payment method.

Although there is no single safest way to pay online, credit cards, debit cards, digital wallets, and traditional bank transfers are the best 4 safest ways to pay when shopping online.

Let’s look at how each of them works.

Credit cards are financial tools that allow individuals to make purchases or obtain cash advances on credit. They come in the form of chipped or magnetic-stripped plastic cards, all of which are issued by banks or financial institutions.

Through your credit card, you get to borrow money up to a predetermined credit limit. The credit limit is what you use to transact, after which the borrowed funds are paid back along with the accrued interest charges.

Since credit cards don't directly debit your bank account at purchase, you will typically have more time to flag any suspicious card spending before your credit card bill is due, potentially avoiding financial losses. Most credit card companies also won’t hold you responsible for unauthorized charges.

Another thing that safeguards credit card transactions is the Payment Card Industry Data Security Standard (PCI DSS). Most major credit card issuers, such as Visa, Mastercard®, and American Express, are members of the PCI Security Standards Council.

Credit card providers like Visa and Mastercard® typically have fraud detection systems that help identify and prevent unauthorized charges, such as the following:

• Purchase Verification: You are typically required to verify high-value purchases through additional steps, such as receiving a one-time password (OTP) on your mobile device.
• AVS: Short for Address Verification Service, this is what allows the merchant to verify a customer’s billing address with the card issuer.
• CVV Security: Online purchases usually require a CVV code, which is a 3-digit code printed on the physical card.
• Fraud Monitoring: The bank or card issuer usually monitors and blocks suspicious transactions with unusual patterns.
• Data Encryption: Sensitive data like your credit card number is encrypted during online payment processing, offering security to your information.

Chargeback Process: You can initiate a chargeback process to dispute the charge and potentially recover your money in cases of fraudulent transactions.

• Limited Acceptance: Some merchants do not accept credit cards for online purchases, often due to high processing fees.
• Interest Charges: If the credit card bill is not paid on time, interest will be charged on the outstanding balance.
• Additional Fees: Certain credit cards may impose extra fees for specific transactions, such as cross-border transfers.

Tip: Some banks offer virtual credit cards, which allow users to generate card details, such as number, expiration date, and security code, digitally. This makes it easier to cancel the card at any time, adding security and flexibility for online payments.

Although debit and credit cards are processed in the same way, they differ in how the account is funded. Both types of cards go through three steps: authorization, settlement, and funding – but unlike credit cards, debit cards deduct money directly from the customer’s checking account.

The payment process begins when you enter your card details, including your debit card number, expiration date, CVV/CVC code, and billing address, into the online payment gateway.

The online payment gateway will then request payment authorization from its payment processor, followed by the card provider and the issuing bank. The bank will ultimately verify the cardholder’s information and either approve or decline the transaction.

Issuing banks additionally monitor debit card activity for signs of fraudulent transactions. In case of any suspicious activity, the card is automatically blocked or frozen. It’ll then remain inactive until the cardholder activates it.

Although debit cards draw funds directly from your checking account, safety features like PIN verification and transaction alerts add layers of security and protect your money from unauthorized access.

The following features also help keep debit card transactions secure:

• Secure Networks: Online debit card transactions are usually processed through encrypted networks.
• Transaction Alerts: Banks typically send real-time alerts via text or email to notify you of any activity on your card.
• Biometric Authentication: Some banks and card providers require fingerprint or facial recognition to authorize transactions via mobile phones.
• 2-Factor Authentication: In addition to your PIN, you may be required to provide a second form of verification, such as a code sent as an SMS for added protection
• Verified by Visa/Mastercard® SecureCode: These card issuers usually request additional authentication, such as a password or code, to verify your identity during high-value online purchases.
• Fraud Monitoring: Banks usually detect unusual card activities.

• Direct Account Access: Unauthorized transactions can immediately impact your available account balance, potentially leading to overdraft fees.
• Chargeback Limitations: Recovering funds from fraudulent debit card transactions can be more complex than credit cards.
• Overdraft Risk: Debit card transactions can result in overdrafts if your account doesn’t have sufficient funds.
• No Credit Building: Unlike credit cards, using a debit card does not help build credit history as it does not involve borrowing money.
• Less Rewards and Benefits: Debit cards usually don’t offer rewards programs like cashback or travel points.

Digital wallets are a type of payment app that stores payment information like credit and debit cards and bank details in one portal, so you can make purchases conveniently without a physical card.

Some popular digital wallets include PayPal, Apple Pay, Samsung Pay, Google Wallet, Alipay, and Venmo.

These online payment services allow account holders to perform transactions without sharing their private information with third parties. Once you upload your cards to the digital wallet, you can make payments from it without having to type in the card details for every transaction.

And if the seller ever fails to deliver the goods or services that have been paid for, digital wallet services often have a "buyer protection" program.

Another major security advantage of digital wallet transactions is the use of tokenization. When processing transactions, digital wallets replace your card data with a unique, single-use payment code, keeping your personal information safe from prying eyes.

This security method encodes the account holder’s information so heavily that even if the retailer's system got hacked, card numbers would never be compromised.

• Tokenization: Digital wallets replace your actual credit or debit card numbers with single-used digital tokens, reducing the risk of information exposure.
• Device-Specific Security: Each digital wallet leverages the security features of your mobile device or mobile payment apps.
• Secure Element (SE): Most mobile devices have a dedicated chip to store sensitive data, including payment information, separately from other data. This chip is called a secure element.
• Fraud Protection: Digital wallet providers typically have fraud protection policies that cover fraudulent transactions, such as account lock and geolocation restrictions.

• Internet Reliance: You will need a stable internet connection to use digital wallets for online payments. Digital wallets and payment apps are also subject to occasional technical glitches or errors.
• Potential Fees: Some digital wallet providers may charge payment processing fees for some types of transactions, particularly international transfers.
• Privacy Concerns: Digital wallets may not be preferable if you want to keep your data offline.

Bank transfer between two bank accounts is another secure payment method. It’s particularly ideal for large transactions and international payments as it has strong end-to-end encryption and authentication features.

Unlike physical cash exchanges, wire transfers are settled electronically. The funds can be sent between banks or through non-bank entities like Western Union.

Some examples of bank transfer methods include

• Wire transfers - A wire transfer is a type of electronic funds transfer that moves money between bank accounts through networks like SWIFT.
• ACH transfers - An ACH (Automated Clearing House) transfer is primarily used in the US for electronic fund transfers between US local bank accounts.
• Mobile Payments: Most banks now offer mobile banking services that allow you to send money to the recipient instantly.

To initiate a bank transfer, you will have to provide some details, such as your name, address, bank account number, and the amount of money to be transferred.

You will also have to provide the recipient’s information, including their full name, address, bank account number, and a unique code such as routing number or sort code for domestic transfers and SWIFT code for international transactions.

The banks would then exchange information about the transaction, including the receiving account number and the amount being transferred. These instructions are relayed securely via an encrypted network, whether a SWIFT transfer or ACH payment.

Upon receiving the info from the initiating bank, the recipient’s bank proceeds to deposit funds into the payment account.

• Regulatory Compliance: Banks are subject to strict supervision by financial authorities, which ensures that customers' data and funds are protected.
• Authentication Protocols: Banks typically implement authentication measures to ensure secure online payments, such as 2-factor authentication (2FA) and one-time passwords (OTPs).
• Traceability: You can usually view the transaction history and information like sender and receiver details, amounts, and timestamps, making it easier to track the transfer.
• Payment Reversals: Some types of transfers like SWIFT and ACH can be revered under some circ*mstances, such as errors or scam transactions.
• Direct Transfers: Bank transfers usually don’t involve a third party, as the money is transferred directly between two bank accounts.

• Processing Time: Transfers between banks, especially internationally, can take several business days to process.
• Fees: Bank transfers can incur fees when using specific services like SWIFT transfers, which can vary depending on the bank and the amount transferred.
• Limited Convenience: You may be required to visit a bank branch to make high-volume transfers, which might not be as convenient as other online payment methods.

Even when you choose the safest online payment option, it’s essential to remain vigilant against potential threats like scammers and hackers. Here are what we recommend you do to protect your financial information and ensure payment security.

1. Avoid unsecured websites - Avoid making payments on suspicious websites without “https://” in their URL, as your information may not be encrypted and might be stolen.
2. Avoid Public Wi-Fi connection - Free public Wi-Fi networks are less secure and can be easily hacked, leaking your personal and financial information.
3. Be aware of suspicious emails or links - Legitimate businesses usually don’t request sensitive details like passwords and payment information through emails, links, or forms.
4. Do not rush - Take your time to review all your transaction details before sending the payment to avoid mistakes or falling victim to scams.

If you are an ecommerce business owner, ensuring the security of your online payment systems is also essential. Consumers will appreciate any efforts you make to safeguard their shopping experiences and ensure they can pay with secure online payment methods.

Payment security also builds brand credibility, drives customer loyalty, and speeds up the conversion process.

As an ecommerce business owner, you can ensure the safety of your online payment systems by using the following :

• Secure payment gateway: Your online store’s payment service provider and payment gateway should be reliable in not only processing transactions but also protecting your customers' sensitive information. You can start by reviewing each solution’s compliance status with the Payment Card Industry Data Security Standards (PCI DSS). This is a set of rules that guarantees the safe handling of credit card data. What’s more, you should check to ensure that the data transmissions are duly encrypted with SSL or TLS.
• Two-factor authentication: Two-factor authentication adds a layer of login security, mandating users to provide two distinct forms of identification. You could, for instance, require each customer to enter their account password along with an SMS OTP. This will minimize the likelihood of unauthorized account access.
• Fraud detection measures: One way to prevent payment fraud is to integrate fraud detection systems, which utilize specialized tools designed to flag and block suspicious activities. A fraudster may, for example, set off alarm bells by repeatedly trying to purchase with different credit cards or from varying IP addresses.
• Regularly monitoring and updating systems: By diligently monitoring your online payment systems, you’ll be able to detect any suspicious activity that could jeopardize your customers' financial information. Then, to safeguard the business from any potential vulnerabilities that may arise due to outdated payment systems, you might want to stay up-to-date with the latest security patches.
• Educating customers: Keep informing your customers about the importance of safe online payment practices. You could, for instance, caution them against sharing card information, even with friends and family members.

While secure payment methods like credit and debit cards, digital wallets, and bank transfers utilize advanced technology to protect your privacy when making online transactions, it’s always better to be safe than sorry in this digital age.

If you’re paying online, prioritize secure payment options to protect your financial information and always be alert for scams. If you’re a business owner, invest in payment solutions to prevent fraud and data breaches.

After all, the only thing better than making money is keeping it safe and sound.