PayPal is a method of payment that takes money from either your credit card or your bank account to pay for online items. It effectively hides your credit card number from the merchant, preventing your card information from theft. If your credit card information is stolen online, the perpetrator not only has your credit card number, he has your name and your billing address.
PayPal is also more affordable than Visa for merchants, which also helps its popularity.
Liability
Unfortunately, the world is not that pink and PayPal has its downsides. Let’s say you never receive the item you purchased online and let’s take a 2000$ HD camcorder as an example.
How PayPal Fails
PayPal claims 100% protection from fraudulent transactions but the reality is otherwise.
- First off, purchases are email confirmed. If someone stole your email and deleted the purchase-related emails so that you don’t see them, good luck trying to get PayPal to refund you after more than 2 days past the fraud.
- Second, PayPal does not provide instant support. The 24/7 support team is case-based only, based on an electronic form for unauthorized activity you have to send, and the service center you can call is available on select hours only.
- Third, this protection only applies to unauthorized activity, and since buying an item but not receiving it counts as authorized activity, you’ll have to file in a dispute with PayPal, which many report to be largely unsuccessful.
- Fourth, PayPal gives insurance for buyers on eBay, up to 2000$ but at the discretion of the seller, so you have to check the insurance on the item before you buy. The camera you just bought may have had only 200$ of insurance meaning PayPal will only give you back 200$. The default insurance for items bought on eBay is none, meaning a lot of items come with no guarantee of delivery at all when bought with PayPal. This protection is also only available to Verified members of Premium accounts, meaning you have to use your bank account for the protection to be there (Verified PayPal member means you are using PayPal with a verified bank account).
- Fifth, unlike what most people think, using PayPal with a credit card does not provide any additional form of protection. Although Visa claims Zero Liability on fraudulent purchases, PayPal transactions are always legit and Visa has no way to get the information on your transactions, it’s private. This means Visa will never reimburse you for fraudulent PayPal transactions.
- Sixth, PayPal does not provide any protection for intangible products. If your purchase was authorized but you never received the digital content, PayPal will leave you dry.
- Seventh, PayPal does not cover extraneous fees. Even if PayPal puts you completely off the hook, the overage fees a fraudulent transaction may have incurred on your bank account will not be covered, you’ll have to deal with your bank for that, which again, like Visa, received a legit transaction from PayPal, not the fraudulent part.
How Visa is More Secure
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Visa doesn’t offer 100% protection, they offer Zero Liability. This means that with any fraudulent transaction, you’re already completely off the hook, no questions asked. Simply call Visa with the number at the back of your credit card, 24/7, and you’ll get instant protection. Visa does this for any purchases whether intangible or a never received item. There’s no need to specify any insurance numbers at Visa, you have Zero Liability, no matter what the amount. Visa will also cover any extraneous fees like credit card limit breaking or credit score issues generated by fraudulent transactions.
Unlike PayPal though, your information is given to the merchant. However, Visa does not offer free merchant services like PayPal and individuals without businesses cannot get their hands on Visa as a payment method for what they sell. Merchants aren’t given your full credit card information either, automated online services act exactly like hardware devices for Visa cards, they never give out the information to the merchant, just a transaction. But fraudulent merchants can use fake Visa online services too that may enable the perpetrators to steal your credit card number, in which case Visa will deactivate the old card, give you a new one, track down the fraudulent purchase and give you Zero Liability for any amount bought with the card.
Visa also actively searches for fraud. If they detect fraudulent patterns in your card’s transactions, they will block further purchases and advise you of potential fraud. You can also call Visa 24/7 if you need immediate access to the Visa card that’s been blocked. Unlike PayPal, you don’t have to wait for an Internet form to be processed.
Conclusion
The Privacy-conscious Alternative
If you still like the privacy PayPal gives you over Visa, there’s always the PayPal Plus MasterCard (Only available in the US). This GE Money Bank issued MasterCard gives you the Zero Liability of MasterCard and extended protection on your eBay purchases, given that they had insurance to start with (full amount refund for fraudulent purchases of tangible items, up to 3 times per year). However, MasterCard doesn’t give you the greatest security because unlike Visa (which is as long as it’s fraudulent), you’re limited to two fraudulent transactions per 12 month.
Theft
Consider this: If someone steals your PayPal account, they steal your identity. They can act up in your PayPal account, which appears as if it was your own actions, which in turn gives you close to no protection at all. If someone steals your credit card, they only steal the card and your name and/or address, not the identity. It won’t bring them close to having access to your bank account at all or any other personal information.
What to choose
My personal choice is Visa whenever possible, I think it’s just more secure. If you have to use PayPal though, I would strongly recommend using their MasterCard solution.
And for the sake of it (I love this add)
We all things we like to think about.
Online fraud shouldn’t be one of them.
With every purchase, Visa prevents,
detects and resolves online fraud.
Nice site. There
What I find troubling is that a dishonest transaction being wether by a credit card or paypal, there is still a theft, the only difference is how to deal with them.
What you need to do is make sure you are dealing with authentic online merchandisers that are reliable and safe. For example, Tigerdirect calls its customers to know if the merchandise has arrived at destination safely.
But i have to agree, credit is much safer since its credit and not a sum stuck into some online account not affiliated to your bank. I prefer dealing with my bank than some online service… Even if its judged “safe” by most users.
Actually your bank merely deals with making the transactions with Visa and informing the Credit Bureaus. When you buy anything with Visa or use its protection, you’re dealing with Visa, not your bank.
This also means Visa is the one giving out the money for your transactions, so a transaction deemed fraudulent simply ends up with Visa never paying the merchant. This is why they have no problem with Zero Liability, because they most often times never lose money for fraud.
And also I think that Visa is much more trustworthy than paypal will ever be in terms of dealing with fraud. (Visa is kind of used to it because cards are in fact often lost or stolen)
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however I think VISA online payment is unprotectable from hacking, and Paypal is safer because it makes transaction detour
Your are Great. And so is your site! Awesome content. Good job guys!
Yes, the fact that you don’t reveal your Visa number, or more simply, don’t type it, when you buy with Paypal, is the first reason everybody wants to use Paypal.
But I think this is false sense of security. Even though your card number can be hacked, Visa has Zero Liability protection, so you won’t have to pay crazy amounts of money even if you have your credit card number stolen. Just report something you didn’t buy and you’re good to go.
On the other side, Paypal does not protect you from phishing sites, and yes, it’s possible to completely integrate Paypal inside your site, so you never know what bad site could scam you by making you enter your paypal credentials. Which in turn, makes your account stolen. It happened to my friend, and yes, even if she called, there was no way she could recuperate her account. Paypal DOES NOT provide protection for such events.
See, Visa, on the other hand, knows who you are, is associated with your bank and protects you, even in cases you’re being phished.
Keep this in mind:
- When your VISA gets phished, only your card number and your name gets phished.
- When your Paypal gets phished, all of your personnal informations get phished and are right in front of the hacker’s eyes, ready for identity theft. And let’s not forget how much information can be entered in Paypal, especially for verified account for Ebay buyers.
PayPal vs Visa made some good points. I did a search on online liability insurance and found most people agree with your blog.