Which Is Safer: PayPal or a Credit Card?
Is PayPal more secure than a credit card? PayPal’s only responsibility is to enable secure transactions. However, the work is expanding and the problems are never-ending. PayPal today has an estimated 392 million active accounts worldwide and provides a variety of goods. 1 They are all intended to make it safe to transmit or receive money, either electronically or in person.
PayPal has been available since 1998, when it became a popular method to pay for eBay goods. If PayPal wasn’t as secure or safer to use as a credit card, cash, or check, it would have been relegated to the scrap heap of defunct technological platforms long ago.
Still, many people wonder whether PayPal is secure. That may not be the best question. PayPal has a slew of tools in place to keep others’ hands off your money. However, the weapons are most effective when you, the PayPal client, also take some simple safeguards.
- PayPal’s business strategy is centered on allowing buyers and sellers to conduct secure transactions.
- Credit card companies have an additional motivation to ensure transaction security. You are not liable for unauthorized transactions in excess of $50.2.
- There are simple security precautions you may take to avoid fraud when using PayPal or a credit card.
Investopedia / Amelia Manley
What PayPal Offers
PayPal is still the default payment method for eBay transactions. However, it is the fifth most popular payment option among all online shops, behind only Visa, Mastercard, American Express, and Discover (as of August 2019).3
It also offers a variety of different goods that allow clients to send and receive money. Among them are:
- The PayPal smartphone app, which allows for contactless payments at physical stores. 4
- The Venmo smartphone app, which is largely used for person-to-person money transfers and daily transactions. 5
- Xoom is a person-to-person payment software that is used to send electronic money throughout the world. 6
- The PayPal Cash Card is a MasterCard debit card that may be used both online and in-store.
- A PayPal credit card, with two cards issued by Synchrony Bank. It also provides a line of credit via Synchrony. 7
- PayPal joined the cryptocurrency market in 2020, enabling customers to purchase, hold, sell, and pay using bitcoin. 8
Each of these items is built with the express goal of safely transmitting money.
How Safe Is PayPal?
All PayPal transaction data is transferred using end-to-end encryption to prevent any hacker from capturing sensitive information as it travels from buyer to seller. This implies that even the receiver does not have access to your financial information. 9
PayPal app users may utilize a second authentication factor to make each transaction more secure. After you enable the SecurityKey function, you will get a text message with a temporary security code that you must input in addition to your password.
PayPal offers six suggestions for organizations to avoid fraud:10
- Keep track of your transactions and reconcile your accounts on a daily basis.
- Set purchase amount limits
- Use the address verification system to validate billing addresses.
- Make certain that the buyer must input the card’s card verification value (CVV)
- Make it a requirement for users to create secure passwords.
- Check that the operating system and business software are both up to date.
The issue is that PayPal is protected against hackers, but you are not. They are searching for flaws in your purchase behavior, both online and in person.
PayPal’s security measures
PayPal has additional regulations in place to handle some of the fraudulent activities and other shenanigans that have arisen as a result of e-commerce:
- If a product bought online using PayPal arrives and is “substantially different from its description,” the PayPal Purchase Protection guarantee assures that consumers are repaid in full, including shipping expenses. It doesn’t cover everything, but if you order a bridal gown and get a dishrag, you’re covered. 11
- If a PayPal-paid purchase does not arrive, you may report it and get a refund.
- If an unlawful purchase is made on your account and reported within 60 days, you are not accountable for it. 12
PayPal vs. credit cards: Which is safer?
PayPal’s protocols are now very much the industry standard for electronic transactions. That is not to say that every bank that offers credit cards adheres to the industry norm.
PayPal even rewards hackers who discover flaws in its systems, a practice known in the industry as “ethical hacking.” “If you care about the product [and] you care about your customers, you care about your customers’ security—this is what you have to do,” says Dean Turner, PayPal’s head of security intelligence. 13
How Safe Are Credit Cards?
Credit card firms have been known to be hostile to several of PayPal’s cybersecurity policies. The banking sector, for example, does not pay hackers to notify them to security weaknesses, according to the Financial Services Roundtable. 13
The basics of credit card fraud
There are two types of fraud in the area of consumer credit protection: “card present” and “card not present.” 14 The first indicates that a physical card was taken and used by a person. The latter indicates that the information was taken and misused. And, increasingly, this means it was used to execute online transactions rapidly, before the theft could be caught.
Credit card firms have the strongest interest to prevent both forms of fraud. This is because, regardless of the amount charged, your liability is restricted to $50 under US law. However, there are also significant drawbacks for customers in credit card security breaches, including some substantial annoyance and potential credit rating loss.
Credit card security measures
Most credit card firms have made significant investments in cutting-edge security technologies to compete with PayPal and other industry leaders. However, not all credit card companies are the same, with some being more modern than others.
The most significant advancement in “card present” anti-fraud technology is the transition to a card that employs a chip placed into a reader to perform a transaction rather than a magnetic stripe swiped down the side of the reader. The card’s microchip delivers encrypted data, making the information more difficult to steal.
This upgraded technology, known as EMV, has made using a credit card at a shop safer by avoiding the theft of your information while it is transferred to complete the transaction. This leaves the user with some responsibility for taking their own security safeguards, especially when making online transactions. 15
PayPal and credit card security breaches
Credit card data breaches seem to be more prevalent than ever. The shops that take credit cards seem to be at blame, not the credit card providers. Capital One, TJX Companies, and The Home Depot have all had major data breaches in recent years.
Malware targeting point-of-sale devices seems to be the source of the issue in these and most other incidents. That is, the business is keeping credit card information in a manner that allows hackers to steal it.
However, PayPal’s security standards have recently been called into doubt. The ethical hackers discovered methods to circumvent key PayPal security measures, such as one-time passwords and two-factor verification (2FA).According to reports, PayPal dismissed the problems. 16
The number of digital payments handled by PayPal in the first quarter of 2021. 1
Tips for Protecting Yourself
When it comes down to it, the user must bear a large portion of the responsibility for account security, not the issuer. That is true whether the corporation is PayPal or American Express, and whether the account is virtual or physical.
When using a credit card
Here are a few pointers to keep in mind while using plastic credit cards:
- Cut up any remaining cards that do not include a chip. Avoid using a reader that needs you to swipe the card because the chip reader is failing or the business has an out-of-date equipment.
- To get cash, only use ATMs controlled by banks.
- Pay for petrol at the station rather than at the pump. Gas pumps are known for being easily outfitted with a card skimmer, which collects account information as it is used. 17
When using PayPal or a credit card online
- Only make online purchases on safe websites. These often have a URL that begins with “https” (rather than “http”) and show a lock symbol. These are indicators that the connection between your web browser and the server of the site is encrypted. This is not assured protection, but it does shut one channel for deception. 18
- Avoid using public Wi-Fi at coffee shops and airports. Instead, use a virtual private network (VPN).
- Don’t save your credit card information at your favorite stores’ websites. Every time, type it in.
- Be wary of phishing scams. These often come in the form of an email or text message promising you something fantastic if you simply click this link.
- Change your credit card (and PayPal) passwords periodically, and avoid using your name, your children’s birth dates, or any other apparent password.
Who Is PayPal Anyway?
PayPal Holdings Inc. is currently a publicly traded firm on the Nasdaq. It had its initial public offering in 2002 but was later bought by eBay. PayPal was once expanding faster than its parent firm. In 2014, eBay chose to split it off, and it once again became an independent public corporation. PayPal has bought numerous more firms in addition to Xoom. Honey Science Corp., an online couponing site; iZettle, a payment processor; and Braintree, another mobile payment app are among them.
Here are some quick answers to some often asked questions concerning PayPal and credit card security.
Is it safer to use PayPal or a credit card?
In terms of security, PayPal is at the top of the stack. That’s hardly unexpected given that it grew with the web and has had to keep up with every fraudulent scheme that has emerged alongside it. It includes some extra features to provide online customers peace of mind, such as a money-back guarantee if your online item is not as described.
Credit card firms have invested a significant amount of money and effort in implementing security procedures, as they should. They are legally liable for any purchases made illegally using your account, excluding the first $50.
Defeating fraudsters is a never-ending effort for any of these firms. Customers may assist by exercising caution while using their accounts, whether they use a conventional credit card or an electronic app.
Is PayPal safe to link to a bank account?
To use PayPal, you must first connect it to a bank account or credit card, or put money straight into PayPal, or any combination of the two. When any of these are utilized, the transaction is completed using encrypted data, which means that your private account information is not divulged to anybody, including the beneficiary of the funds. It is less expensive to pay straight from your bank account. There are no extra costs. 19
Can you get scammed with PayPal?
There are several internet scammers that will take PayPal or any other method of payment and deliver nothing or nothing that resembles what you paid for. In such situation, PayPal’s protection program offers to repay you in full. 9
This is a liberal policy for at least two reasons: PayPal can then gather enough information to denounce the criminals to the police, and it can give the trust that its users need to utilize the PayPal network.
Another form of fraud to avoid: if you get an email advising you to download a new version of the PayPal app, do not click on it. Go to the PayPal website and ensure that a new version is available.
Is PayPal safe for debit cards?
The same response as before. When you pay with a debit card, the information is only transferred in encrypted form.
Is PayPal safe to receive money?
Yes, and you may transfer money immediately from there to your bank account.
The Bottom Line
PayPal, a credit card, or a PayPal credit card may be used for everyday transactions between buyers and sellers both online and offline. Consider convenience, the extra features that come with the account, and the interest rates offered by the institution when deciding which to utilize.
Whatever method you use, you have part of the responsibility for safety. Use strong passwords and update them on a regular basis. Choose your internet vendors prudently. Avoid using public Wi-Fi and check your account often for unauthorized transactions.
If you want an alternative to PayPal, you may look at one of its main competitors. Google Pay, Stripe, Payoneer, and Skrill are among them.
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