Safest payment option?

Is it:

a. credit card
b. debit card
c. paypal
d. none of the above
e. bank account (I forgot this option)

?

Safest? Pay cash for a single-use VISA debit card at Wal-Mart or someplace similar, put $20 on it, and that is absolutely all you could risk, since if the card is compromized, it links to nothing else. Yet I believe you can go to any WalMart and pay cash to a cashier to add more money to it.

How are you defining "safe", and in what context?

Since we're on the SL forums here, I assume you're talking about risk to individual users should LL's payment info database ever be breached. In that case, there are two things to be concerned about, finances and anonymity.

If you mean financial risk, I'll have to go with credit card. That's the only option that puts a cushion in between a thief and your actual money. If someone steals a credit card number and spends with it, he or she is spending the credit card company's money, not yours. All credit card companies offer some form of protection from fraudulent charges, and none of them require you to spend your own money immediately. This gives you considerable time in which to alert the proper authorities and have them launch an investigation before you're liable for the stolen funds, and in most cases, you won't end up having to pay.

Debit cards, on the other hand, while they will in most cases will also offer fraudulent charge protection, are much more of a risk to you as an individual since the money spent on them will come directly out of your own bank account. Depending on the bank, it can take a while to get your money back, if you get it back at all.

Paypal is arguably the most risky. It might be a little harder for someone to go on a spending spree with your Paypal account than with your credit card number, but assuming they are able to do it, Paypal's policies for protecting you and your money aren't always clear. It can be a slow and difficult process to dispute charges with them.

If by "safe", you're talking not about financial security, but about anonymity, then I'd say none of the options are good. Your billing info for all of them contains your name, address, and phone number. In that respect, all the payment options are equally "unsafe". The only way to remain truly anonymous on the internet is never to post any personally identifying information about yourself anywhere, never to get a back account or a credit card, and never to use your own computer online. Anything short of that, and SOMEONE somewhere on the net will always know who you are, SL or no SL.

None is clearly "safest", since it means you don't neccesarily have even personal info on your account at all.

But if you want to buy things, I think credit cards are the best bet as well. They have fraud protection, and do not draw on your bank acount directly in any way. I'd rather have a credit card messed up while I pohone the company to get fraudelent charges undone than have my bank account empty when it comes time to pay the electric bill.

As much as possible, I only use credit cards for all online transactions.

Personally, I'd like to see SL introduce a game card payment system. It'd make MY life a lot easier. (And fairly secure so long as nobody hacks Wal-Mart's databases.)

Kam

It does depend a bit on whether or not you are in the U.S. as regulations regarding credit card liability differ internationally. In the U.S. you are only liable for $50 if someone gets your credit card number and you report it within a reasonable amount of time, from the time you are aware of it. Reporting time varies between credit card companies and policies. So in the U.S. your maximum liability with a credit card is $50.

In some other countries you are 100% responsible for the liability of the fraud. So credit card in those countries would be a really bad idea. I think Brasil is one of those countries but I can't recall for certain.

In the U.S., the worst that you can do is use your debit card, that allows hackers access to your bank account and then you are at the mercy of your banks policy as to whether or not they will restore the money to your account or not. Some do, most don't do it on a timely basis. You will have to fill out a ton of paperwork and it will take you weeks to straighten out and you will have checks bouncing up the ying yang. Which the bank will charge you for.

A pre-paid debit card is not a bad option. You can go to Wallmart and to some banks to set one of those up. The problem with those is that they often have an expiration date and when it goes past the expiration date if the amount on the card has not been used, the money is rendered invalid. In otherwords, you've lost it. So careful of that. Ask about it.

As the other poster said Paypal is arguably the most risky. It might be a little harder for someone to go on a spending spree with your Paypal account than with your credit card number, but assuming they are able to do it, Paypal's policies for protecting you and your money aren't always clear. It can be a slow and difficult process to dispute charges with them and the trail can lead directly back to your bank account depending on how you back up your Paypal account.

Wow I'm learning a lot.

Are debit cards are the same as check cards?

Yikes - I thought it said credit instead of check. My bad.
Yes they are the same.

The only difference is how the acquirer processes the transaction. If they have you put your PIN in, then it is a "DEBIT" transaction and if you sign the receipt, then it is a "CREDIT" transaction. The fee structure is different for the retailer but transparent to you [generally].

Regardless - it always is debited directly from your bank account. Which is one of the reasons I never use my debit/check card any longer at gas stations, in bars or at restaurants (way, way too much fraud there). I'm in Florida and it's a hot bed for ATM card fraud also but copying debit cards and watching people put in their PINs has become a real problem worldwide.

Yes and no. A debit card is a check card if you're working at a credit union, but it's different if you're working at a merchant.

I used to work in the banking industry (for a software company that writes credit union data processing software).

The credit unions call them:
ATM - card you stick in the ATM. Requires a PIN for purchase.
Debit - Visa or Mastercard card that is tied to a checking account. NO PIN
Credit - card tied to a line of credit.

The stores call them:
Debit - card you stick in an ATM and requires a PIN
Credit - Visa, MC, Amex, Discover. Does not require PIN.

I have no idea what the banks call them... probably Check cards.

So it gets weird, because two different entities use the same word for "Debit".

So, in short, never use the term "debit card", since it means different things to different people.

Use the word "Check card" when you mean "Visa or Mastercard card that is tied to my checking account" Check card is the most logical name for them, and so that's what I stick with.

One thing to keep in mind about ATM/Check Card/CC transactions is that they cost the merchant money. The cost to the merchant is usally $.29 to $.39 and 2% to 3% of the sale. American Express and Discover charge 7%! This doesn't seem like much, but when you add up alll of the sales that even a small business does, it can add up to hundreds of dollars a month. This small cost is why you don't get charged by your bank to use your CC: the merchant pays for the privelage of letting you pay with a CC. So don't complain too much when you see the "we charge .45 per transaction" at the local gas station. That only covers part of their cost to provide you with the service.

This does make their life a little simpler, since they don't have to handle as much cash, reducing the probablity and the magnitude of theft, and a CC transaction can actually be faster than a cash transaction, if the store is on a full time Internet connection.

Incidentally, stores are not allowed to charge you extra to use your credit card, even though they may charge you to use an ATM card for a purchase. This is because of the merchant agreement with Visa and Mastercard. Also, your credit card transactions are protected from fraud, where your ATM transactions might not be. Plus, the process of fighting a bad charge is easier with a credit card. You can dispute charges for many reasons, and I've successfully disputed a couple of charges for products that didn't work as advertised - even though the merchant had a "no refund" policy.

So if you have the choice of "Debit or Credit" or "ATM or Credit", choose credit. It's almost always safest.

This is one of the reasons people would like to see smart cards used. Smart cards actually hold the balance on the card, instead of at your bank, so they act like cash.

The only problem with smart cards is that nobody has built a truly fraud-free smart card chip yet. So, for now, smart cards are only used for a limited number of things, such as computer user authentication, phone SIM cards, and things like coin slot replacement at lanudrymats and the like.

I'd like to see a smart card that actually showed the balance and the last couple of transaction amounts on a display on the card itself (possible with e-ink). Then, it would be difficult or impossible for a teller or waiter to defraud you by swiping your card twice.

A savings account with no money kept in it linked to a PayPal account, also with no money kept in it, is what I use. Money goes into those on an as needed basis, and never stays in there for long. No point anybody trying to do nasty stuff with those accounts, there's no money in it.