What are alternative payment methods (APMs)?
Choosing Safe Payment Methods: How to Protect Your Online Transactions
Fraud is on the rise, meaning security should be paramount for online businesses, and that requires you to choose only the most safe payment methods to offer your customers.
Not only do safe payment methods protect you from the financial loss of cybercrime, they also shield you from reputational damage that can have far-reaching consequences for your business.
But what payment methods are safe for online transactions? There have never been more options to choose from, and not every single one is right for you and your customers.
In this article, we explore the top five safest ways to pay online, including virtual credit cards, digital wallets, prepaid cards, ACH payments, and cryptocurrency, explaining how they work and what makes them a secure option for digital transactions.
Safest online payment methods
Discover the top five safe online and alternative payment methods for worry-free transactions.
Virtual credit cards
A virtual credit card is a type of temporary payment card that, rather than being physically issued as a plastic card, exists exclusively in a digital format, with a randomly generated card number, expiration date, and security code that are linked to the user’s account.
Virtual cards are generated by financial institutions or payment providers for use during a single online transaction. As they are digital and disposable in nature, and replace your actual credit card details, they are unable to be lost, stolen, or used for any other purpose. Even if a hacker did manage to steal a virtual card number, it’s easy for the customer to cancel it and generate a new one. On top of that, the issuers of virtual credit cards typically utilize robust security measures to protect cardholder data.
A digital or mobile wallet is an application that allows users to store and manage credit and debit cards on their digital devices, which they can then use to make online transactions without having to reenter their card details.
Digital wallets are an exceptionally safe payment method because they employ so many complimentary layers of protection. Before the user can even make a payment, they need to unlock their device using a password or biometric information such as a face scan - that’s layer one. Then, when confirming their digital wallet payment, they need to verify their identity again by using passwords and biometrics - that’s layer two. What’s more, most digital wallets require two or even multi-factor authentication, meaning several verification methods must be used in combination in order to approve each payment - that’s layer three.
But that’s not all. Digital wallet payments also employ two additional protective measures: tokenization and encryption. Tokenization involves substituting sensitive payment information, such as card details, with unique and single-use tokens during transactions, meaning no stealable data is exposed to fraudsters, while encryption simply encodes data to ensure that only the authorized recipient can read it.
This multi-faceted approach to security makes digital wallets one of the safest online payment methods.
In a similar fashion to virtual cards, prepaid cards are a very secure online payment option because they’re created to have a limited use. Primarily, as they need to be loaded up with money before they can be used, even if a prepaid card is stolen, the criminal can only spend the preloaded funds before the card becomes useless. Secondly, prepaid cards are often created for a specific purpose - for example, spending on a particular product or with a particular retailer - meaning they can’t be used for any other types of spending.
Additionally, prepaid cards are not directly linked to the customer’s bank account and don’t require them to share any sensitive information, meaning that no exploitable information is ever exposed to fraudsters.
An ACH payment is a type of electronic payment where money is transferred between banks using the Automatic Clearing House (ACH) network (rather than card networks like Visa or Mastercard), a system established in the 1960s to facilitate payments for businesses, consumers, and federal and state governments. Owing to its long history and use by a wide variety of players, the ACH network has established strict protocols for payment data security.
To enhance its security credentials further, ACH also uses encryption and tokenization. These combined safeguards make ACH payments a highly secure and reliable method of electronic fund transfer.
Cryptocurrency refers to any decentralized digital or virtual currency that relies on the blockchain. And while their volatility has given cryptocurrencies a justifiable reputation as a potentially risky investment, that says nothing about their security for online transactions.
But what does make crypto secure? Cryptocurrencies exist exclusively on the blockchain, a shared digital ledger that’s distributed across a large number of computers. Every time a participant in the blockchain makes a transaction, it is authorized, and a block is created to represent it, which is then sent to every computer in the network. This distribution ensures that a block cannot be altered without the consensus of the entire system and not without affecting subsequent blocks, rendering it effectively immutable.
On top of that, a crypto user doesn’t need to have a credit card or bank account to make payments, which, as assets of the traditional financial system, are primary targets for cybercriminals.
Use safe payment methods with Checkout.com
Ensure your payment security with Checkout.com. Our payments platform facilitates dozens of payment methods, including the ones listed above, allowing you to offer your customers the most secure ways to pay that work for them.
And to further enhance your security, Checkout.com gives you access to advanced customer verification protocols like 3DS, which uses multi-factor authentication to approve payments; as well as a robust fraud detection tool that combines machine learning and flexible rules to root out criminal activity while increasing your acceptance rates.
Find out more about payment methods with Checkout.com or speak to one of our experts.
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