The Learning Center

GLOSSARY TERMS
# - A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z

Online Credit Cards
 Jul 29, 2004


Online shopping is more popular than ever but consumers still have concerns about using their credit cards online.  This article will review some of the solutions and other options when using online credit cards to shop, and the pros and cons of each.



There are many different measures being employed right now to protect personal information online. This is true with credit cards as well. Indeed, with online shopping becoming ever more popular, it is no surprise that online credit cards and other forms of payment are becoming increasingly popular.

Online credit cards: Temporary numbers

One of the concerns that many online shoppers have about using their credit cards over the Internet is the storage of credit card numbers in online databases. Another concern is third parties hacking the transaction and stealing the number. In order to provide another layer of security, some credit card issuers offer temporary credit card numbers.

Temporary credit card numbers are designed for limited use on the Internet. These are numbers assigned by the issuer to a customer for one time use. The number is connected to the user's regular credit card account, but the number, expiration date and security code are all unique and only effective once. Once the user completes the purchase the temporary credit card number becomes inactive. If anyone else tries to use the number (or if the customer attempts to use it again), it will be rejected as payment.

"Smart cards"

Another growing trend is the advent of "smart cards." These are credit cards that come with a microprocessor embedded into the card. There is a highly secure and involved authentication process that comes with these cards. The cards themselves have memory and storage, and they are highly encrypted. You can use them online and off. There are not a lot of them, but they are considered one of the options for the future.

Third party payment

For online shopping, another option is emerging: third party payment. One of the first third party payment providers was Bill Me Later. Bill Me Later is a credit granting company. You apply for the program, and if you are accepted, you pay with Bill Me Later. The company pays the merchant, and sends you a bill later. As long as you pay in full, there is no interest.

Other third party payment systems operate a little differently. Google Checkout, PayPal and Amazon Pay Now all offer the option for third party payment. In these cases, your account is linked to a bank account or to a credit card. When you pay with this type of third party company, the company pays and then immediately deducts the amount from the linked account.

Third party payment is becoming increasingly popular because it prevents you from having to share your personal and payment information with a lot of companies. If you wanted to shop at three different Web sites, and they all take PayPal, then all you have to do is arrange payment with PayPal. None of the three Web sites has access to your credit card or bank information; only PayPal does. This arrangement effectively limits the number of companies and people that can access your payment information.

There are many advances right now toward protecting your payment information and your privacy online. These advances make online shopping more secure and keep your credit card information safer



Related Article: Business Credit Cards >>



* See the online credit card application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the "Apply Here" button, you can review the credit card terms and conditions on issuers website.