Credit Cards Still Best Option for Online Buying

I have seen the studies. I know that fraud is moreprevalent online and that many people are wary ofgiving their credit card information to Internetmerchants. But credit cards still seem like the bestand most convenient option.

I’m sure I would besinging a different tune if mine had been one of thecredit card numbers snatched by hackers, but I justdon’t see a real need for alternate payment systems.

8 Million Users

Such systems seem to have caught on with auctionsites: PayPal has alucrative deal with EBay (Nasdaq: EBAY) andclaims to have more than 8 million registered users.Nothing against PayPal, but I would be curious to knowhow many users registered, used the service once and then gave up.

The company claims its system is more convenient than credit cards,but I don’t think any payment system is easier thantyping in a credit card number, which I can do in threeseconds flat, from memory, with one hand tied behindmy back.

Pay To Play

With online payment systems — such as PayPal, Citibank’sc2it and Ecount — you must not onlyregister and open an account, but also pay a fee for some types of transactions.

Use a creditcard and let the merchant pay the fee, that’s my motto.

And most online payment services let online shopperspay with a check, bank transfer or credit card. Whynot just use a credit card in the first place?

Online payment systems have real value forsmaller Web merchants because they cost less thancredit cards — but unless consumers are offered moresignificant incentives to use them, these systems are unlikely to catch on for non-auction e-commerce.

Fraud Still Exists

Then there is the safety issue. Online payment systemshave not been immune from fraud, especially in theearly days of e-commerce.

And for those concerned about giving out acredit card number online, does it really make moresense to give a payment system direct access to yourchecking account, as you must with Western Union’s MoneyZap?

When problems with online fraud have cropped up in the past, customer service has been less than stellar.And because person-to-person payment systems are notregulated by brick-and-mortar banking laws, consumershave nowhere to turn if they have a problem with such a system, be it fraud or some other complaint.

Cash and Web Don’t Mix

Proponents of online payment systems argue that asignificant percentage of the population uses cash orchecks exclusively. Therefore, they say, Web sites that cannot accept those forms of payment are missing out on a hugemarket.

But are those people really likely to use theInternet to make purchases? My father doesn’t believein credit and uses his checkbook so often he shouldhave a holster for it, but you couldn’t get him nearthe Internet if you hitched him to a team ofClydesdales.

No Big Deal

It’s not that I don’t know what it’s like to havea credit card stolen. In fact, I have had plentyof experience — just not online. Once, a crafty NewYork subway criminal relieved me of my wallet and wenton a buying spree at Woolworth. Nothing like shootingfor the stars.

Another time, I left my credit card in my hotel room,and someone on the housekeeping staff found it andhelped herself. It was just like Internet fraud — Inever even knew the card had been used until I got thebill. Fortunately, the thief was dumb enough to order amultitude of goods on the Home Shopping Network andhave them delivered to her home address.

Presumably, Internet criminals are a bit more savvy,since they need to know how to hackinto a Web site. Even if your credit card isstolen, however, all you have to do is call thecompany in order to be absolved of almost all charges.

I realize, of course, that I have now jinxed my luck,and I fully expect my credit card number to be stolenthe very next time I buy something online, after whichI will be right back here complaining about theshameful lack of Web security. Stay tuned!

What do you think? Let’s talk about it.