Afraid to use your credit/debit card online? There’s an app for that!

We’ve all heard about the dangers of using your credit cards on-line. Someone can steal the number, forge the card, and you’ll have to work hard to dispute tens of charges and waste a lot of energy, and may be some money. Not to mention the potential identity theft when you provide your billing address everywhere, etc.

How to avoid that? Several different options, for your choice.

1.Don’t shop online. Well, yeah, it’s not for everyone. After all, there are still the brick-and-mortar stores around.

2. Use PayPal, Google Checkout or Checkout by Amazon – Paypal, Google and Amazon provide a “Checkout” service, and many on-line merchants sign up for either of them. Some retailers sign-up for all of them. The idea is that you have a single entity that actually charges your credit card and knows your billing information (that entity being PayPal, Google or Amazon, for each of the respective services), while the merchants interact with the service provider, and are not directly billing you. This is, indeed, somewhat safer. In fact, this is a lot safer. However, there are still privacy concerns here.

First, the service provider is still saving your billing information. Although it is not spread all over the Internet anymore, it is still saved somewhere out of your reach.

Second, someone may get a hold of your user name and password to the service in the same fashion someone can get a hold of your credit card details, and the result will be very similar as well.

4. Bill-Me-LaterBill-Me-Later is a service (owned by eBay, like PayPal) which provides the shoppers with an option to buy now, and pay later. Some stores are replacing their own financing options with this service. This is, again, a way to aggregate billing from several stores into one account, without revealing your billing information. However, if the above services (PayPal, Google and Amazon) don’t provide any credit, but are rather “proxy” connectors to your credit cards, Bill-Me-Later is a credit provider on its own. This means that in order to sign up you’ll have to provide your SSN, and your credit will be checked. Bill-Me-Later account will appear on your credit report together with all the rest of your revolving accounts (i.e.: from credit-reporting agencies perspective, it is just another credit card on your name).

4.eBillmeeBillMe is a relatively new service, that is gaining momentum. The idea behind it is to adopt all the positive points from all the services mentioned above, while addressing the negatives. So how does it work? Similar to other services, merchants provide eBillMe as a checkout option which you can choose. If you do choose it, the service will send you an eBill (to your bank account), and you’ll pay it using your bank’s bill-pay service. Once the payment is received, your order will be shipped.
The benefits are clear: the merchant will have a verified payment prior to shipping the items, which is obviously good for the merchant. The shopper doesn’t have to provide any billing information at all, and is not charged. Receiving an eBill on your account is like receiving a bill in the mail – you don’t have to pay it. So even if someone does get a hold on your eBillMe credentials, they won’t be able to actually charge any money from your account. What they will be able to do is to let you know of the problem by sending you an eBill, which you will obviously not pay. The merchant is safe as well, because, since the eBill hasn’t been paid, the merchandise hasn’t been shipped. One additional benefit is that since you’re paying from your bank account, you’re not accruing any debt. In this sense it is similar to using a debit card, and safer for people who have tendency to abuse their credit limits.

Why isn’t it perfect? Well, the benefit of the credit cards is the credit. You get to build up the charges and then pay them later on when you have the money. Some people pay every month (and get a free credit for a month), and some pay over some time (with interest). When you make a large purchase, you may want the ability to pay over time, which you won’t have with eBillMe.

Also, many credit cards have various perks (like cash-backs, rebates, frequent flier miles, etc), which you won’t be able to take advantage of with eBillMe. At least for now.

And the last thing – since you have to use the bill-pay service to pay the eBillMe bill prior to the shipment of your order, it is safe to assume that it will take a week or two for the order to ship. Bank usually commit for no less than 5 business days for the bill-pay checks’ delivery (which is a week, in the real time, not counting the holidays), and then eBillMe will have to transfer the money to the merchant, and the merchant to process it, and it all will take another several days. Take that into the account as well.

Enjoy your online shopping,

Your Little Advisor!

This entry was posted in Banking, Online Shopping, Smart Credit, Smart Shopping and tagged , , , , , . Bookmark the permalink.

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