Payment Options for Export Import Trade Part VI - Payment Through Credit Card - Is it Safe ?

Credit card is an extremely convenient option for paying as well as receiving small value payments over Internet. Anyone can install a payment gateway system for receiving payments from overseas buyers for sample or even small shipments. However, is it safe ? We discuss safety angle first.

Contrary to popular belief - credit card is a much safer payment option than cash or cheque, provided you follow certain safety rules. Its like motor driving - there's always risk of accident but sticking to traffic safety rules minimizes the risk significantly.

The Real Question - How Safe is it for Internet ?

Frauds relating to credit card is nothing new - it happens everyday in off-line world. It has been around as long as credit cards are in circulation and in all probability will exist so long as credit cards do in their current form.

So, the real question should be - is it safe to use credit card in Internet ?

Let us examine the special threats that exist in online world only and how to counter them.

Anonymous World of Internet

Much has been written about anonymous nature of Internet that guarantees freedom of expression and at the same time provides a convenient cover for scamsters and con artists to hide behind.

So, if you are gullible enough to hand over your credit card details to an unknown person or use as insecure a medium as e-mail to convey it - its as good as inviting scamsters to rip you. After all, you do not hand over your credit card to strangers - then why should you do so on-line ?

The question - how to ascertain identity before handing over credit card details ?

Secure Payment Gateway

General web-sites send and receive information through public channels that anyone with little knowledge of Internet can trap and 'listen' to. Secured sites send and receive information in encrypted form so that even if trapped - deciphering the encrypted information is not easy.

So, a web-site that wants to accept credit card MUST BE secured. You can make out if the web-site is secured or not from your browser - if you see a padlock at the bottom right or left hand side of your screen, this denotes that you are on a secure server.

Credit card accepting web-sites should have security certificate from an accepted third party authority like Verisign. A Verisign certified secured site is generally considered safe enough for on-line credit card transaction.

The other component of the site is 'payment gateway'. Its a software that accepts and verifies credit card details with credit card issuing bank. We shall discuss about it in detail in forthcoming issues.

Threat of Identity Theft

On-line credit card payment is extremely convenient - all that's needed is the credit card number and date of birth. Neither physical presence nor signature is required for transacting on-line - making it an easy prey for identity theft.

So, anyone who has access to your credit card number and date of birth can use your credit card to defraud you - right ? Wrong ! In most cases.

Perhaps the above was true few years back - but not anymore. Many payment gateway providers have developed sophisticated techniques to detect on-line frauds and can prevent many such threats. The fraud detection engines are still evolving, the systems are not fool-proof - but it now requires much greater degree of sophistication on the part of fraudster to commit on-line credit card fraud.

Extra Protection Against Fraud

Perhaps you do not realize it, but shopping with credit card is actually safer than paying by cash or cheque. In the event of a fraud or even bad delivery - consumer can ask his/her bank to stop payment. In technical jargon, it is called 'Chargeback' - where the credit card company removes the purchase from consumer's bill and the merchant is not paid.

Happy and Safe Surfing

Dr. Amit K Chatterjee

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Source: FAIDA - Newsletter on Business Opportunties from India and Abroad Vol: 4, Issue 25 ; Feb 19' 2004

Author : Dr. Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15 years in various capacities like Research and Information Analysis, Market Development, MIS, R&D Information Systems etc. before starting his e-commerce venture in 1997. The views expressed in this columns are of his own. He may be reached at )

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