Introduction
In today’s digital era, there is a high chance that you have already tried to transfer, pay or receive money online for goods and services. Our world is being shaped by digitization and technological innovation, industries and economies are adapting and redesigning old business models. Physical cash becomes outdated, and contactless transactions, especially in light of COVID-19, are in great demand and so businesses and customers are looking for more convenient, faster, and safer payment and money transfer alternatives. Today, we will discuss the two digital payment methods available, PayPal and credit cards. Although you can use a physical credit card to pay physically in stores, our topic will focus on credit cards being used for online purchases.
What Is Safer For Your Money? Nov 25th
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In today’s digital era, there is a high chance that you have already tried to transfer, pay or receive money online for goods and services. Our world is being shaped by digitization and technological innovation, industries and economies are adapting and redesigning old business models. Physical cash becomes outdated, and contactless transactions, especially in light of COVID-19, are in great demand and so businesses and customers are looking for more convenient, faster, and safer payment and money transfer alternatives. Today, we will discuss the two digital payment methods available, PayPal and credit cards. Although you can use a physical credit card to pay physically in stores, our topic will focus on credit cards being used for online purchases.
PayPal is an electronic commerce company that facilitates payments between parties through online transfers allowing users to connect their bank account, credit card, and debit card and use the platform to make online payments, shop, send, and receive money between friends, family, and businesses securely (Kagan, 2020). But PayPal itself is not a bank. Contrary to a credit card, that is provided by a bank or financial services company that enables cardholders to borrow funds to pay for products and services at merchants who accept credit cards (Bloomenthal, 2021).
The usual process when you purchase something online using your credit card is you add items to your basket. You go to the checkout page where you’ll provide billing details such as name, address, contact number, and email address. You choose your payment method (credit card, debit card, PayPal, and bank transfers), in this case, a credit card. You input whether your card is Visa, Mastercard, or American Express, and the card details such as card number, expiration date, and security code. Lastly, you confirm your payment.
The Federal Bureau of Investigation (FBI) defines credit card fraud as the unauthorized use of a credit or debit card to fraudulently obtain money or property. Identity theft strategies and transacting through unsecured websites can put your credit and debit card details at risk. Both PayPal and credit card companies have security measures to protect users’ accounts.
So, what's the difference between the two? When you pay using a credit card, you must re-enter your credit card information at various online checkouts, which can be inconvenient, and if you don’t take necessary precautions, your credit card is prone to fraud. When you pay using PayPal, you don't have to enter your credit card information every time you pay as you've already linked your card to your account and all of your payment information is securely stored in an online vault. But just like any other accounts, a PayPal account can be hacked by bad people if you don’t take care of it.
PayPal is safer as your financial details are encrypted and users can also use its second authorization factor in which you'll receive a text message with a temporary security code that you must input in addition to your password, making each transaction more secure. Also, PayPal has Buyer Protection, if your eligible PayPal purchase doesn’t arrive or is significantly different from the seller’s description, you can report it and get a refund. So it means that using a credit card in PayPal gives you two layers of protection because you have fraud protection from your credit card and Buyer protection from PayPal.
It may seem that PayPal is winning in this situation. However, these financial companies are not the only ones responsible for safe transactions, we as users have a responsibility too. Whether you are using any of the two, these are some reminders to keep safe when making financial transactions online. 1.) Only buy from reputable websites and online retailers. Secure websites have a padlock symbol and “https” at the start of the web address. 2.) Make sure to always log out of sites you’ve made a purchase and never save your credit card information online, type it in every time. 3.) Always use strong passwords and change them often. 4.) Always review your transaction history or statements so that you’ll identify which one is unauthorized.
Finally, PayPal includes several extra features to give online customers peace of mind, such as a money-back guarantee for purchases that you didn’t receive or different from what is expected. When you use a credit card linked to your PayPal, the transaction is completed using encrypted data, which means that your private account information is not exposed to anyone. It is also easy to get a PayPal account as you only need a phone and email address, however, your account is limited if you don’t have a connected bank account, credit, or debit card. Whereas getting a credit card is harder as there are many considerations such as your credit score, your income, and your work.