Online payments: balancing security and convenience

Hanover - Online PaymentAs online shopping grows in popularity, online shoppers simply have to ensure their virtual shopping experience includes a secure payment system.

Shoppers have plenty to chose from and they all have pros and cons. Choices need to be made between security, convenience and speed.

"Convenience is the natural enemy of security," says Alex Kossel, who works for the Hanover-based magazine c't.

The first step is to make sure that the shopping site is protected with a secure-sockets-layer protocol or SSL. "You can usually identify this with a small padlock icon on your browser," says Kossel. If the symbol is not visible, shoppers should right click on a data entry field to check out the properties menu and see if the site is SSL encrypted.

Most online shopping sites offer multiple payment methods. Frank Rosengart of Hamburg's Chaos Computer Club, says the safest payment methods is still using a credit card or a bank transfer.

If there's any doubt about transaction security, it's up to the merchant to prove that the transaction is valid. If payment is made by bank transfer, the customer can cancel it within six weeks of purchase. Merchants rarely offer payments by bank transfer and they are as just as hesitant about sending bills to customers for later payment.

Many online stores cooperate with payment systems, like Paypal, a subsidiary of EBay. The company says it operates 141 million accounts worldwide. "The customer can pay Paypal, without passing on his personal data to the merchant," explains Barbara Hueppe, a spokeswoman for Paypal's German operations outside Berlin. Money is debited from the customer's account to Paypal. "Then we forward the money to the merchant," says Hueppe.

But some experts feel Paypal is not secure. "You only need the customer's e-mail address and password and you have access to their entire bank account," says Kossel. But there are controls. For a little under 8 dollars, Paypal customers get a token, which regularly generates new six-digit codes. Those codes can then be entered, along with a password, to provide an extra layer of security during transactions.

Other micro-payment systems include Click & Buy and T-Pay. These have specialized in handling payments for smaller transactions, like downloading music. These services also lack total security, says Kossel. But, as the sums of money are so small, the chances of great financial loss are also limited.

Another system called GiroPay directs customers to a bank's website. Rosengart also sees the potential for abuse here. "Swindlers can direct customers to a fake website and get them to give away their personal data."

Many people shopping on EBay are turning to prepayments. Customers should only use this system with especially reputable shopping destinations. Even when payment is made on delivery, customers should exercise caution and make sure that the delivered merchandise is what they paid for before sending money. (dpa)

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