A Consumer's Guide to E-Payments
The Internet has taken its place beside the telephone and television as an important part of people's lives. Consumers use the Internet to shop, bank and invest online. Most consumers use credit or debit cards to pay for online purchases, but other payment methods, like "e-wallets," are becoming more common.
The Federal Trade Commission(FTC) wants you to know about these new payment technologies and how to make your transactions as safe and secure as possible. Keep these tips in mind as other forms of electronic commerce, like mobile and wireless transactions, become more available.
And how would you like to pay?
Most online shoppers use credit cards to pay for their online purchases. But debit cards - which authorize merchants to debit your bank account electronically - are increasing in use. Your debit card may be an automated teller machine (ATM) card that can be used for retail purchases.
To complete a debit card transaction, you may have to use a personal identification number (PIN), some form of a signature or other identification, or a combination of these identifiers. Some cards have both credit and debit features: You select the payment option at the point-of-sale. But remember, although a debit card may look like a credit card, the money for debit purchases is transferred almost immediately from your bank account to the merchant's account. In addition, your liability limits for a lost or stolen debit card and unauthorized use are different from your liability if your credit card is lost, stolen or used without your authorization.
New electronic payment systems - sometimes referred to as "electronic money" or "e-money" - are also occurring. Their goal is to make purchasing simpler. For example, "stored-value" cards let you transfer cash value to a card. They're commonly used on public transportation, at colleges and universities and at gas stations. Many retailers also sell stored value cards in place of gift certificates. Some stored-value cards work offline, say, to buy a candy bar at a vending machine; others work online, for example, to buy an item from a website; some have both offline and online features. Some cards can be "reloaded" with additional value, at a cash machine; other cards are "disposable" - you can throw them away after you use them. Some stored-value cards contain computer chips that make them "smart" cards: These cards can act like a credit card as well as a debit card, and also can contain stored value.
Some new Internet-based payment systems allow value to be transmitted through computers, sometimes called "e-wallets." You can use "e-wallets" to make "micro payments" - very small online or offline payments for things like a magazine or fast food. When you buy something using your e-wallet, the balance on your online account decreases by that amount. "E-wallets" may work by using some form of stored value or by automatically accessing an account you've set up through a computer system connected to your credit or debit card account.
