When shopping online you will encounter various ways to pay for your purchases. Besides the familiar payment methods, such as direct debit or credit card, new payment options for online shopping have taken hold. Mostly, all it takes is a click and the money is as good as with the retailer. Here’s an overview of the key internet payment systems, including their advantages and disadvantages. For more information about online shopping and secure payments, we have another article that walks you through how to make sure you are doing it safely.
From good to bad: Popular online payment methods
Invoice: The most secure method
You pay once you receive the goods and have checked that they’re all in order. Typically, the invoice is then paid by bank transfer.
+ Very secure
– Really longwinded
– Only a few retailers offer this
PayPal: Simply practical
PayPal doesn’t just offer secure money transfers, but also Buyer Protection where PayPal will reimburse you if the eligible item doesn’t arrive or doesn’t match the seller’s description. However, you first need to register for the service at www.paypal.com before you can pay online using PayPal. To pay, you can add a credit card, enter your bank details for direct debit, or top up your PayPal account with credit. Sensitive data is not transferred during the payment process. Plus point: A growing number of online shops are offering the Express Checkout option where the retailer also receives your delivery address details from PayPal.
+ Secure
+ Convenient
+ Widespread
Amazon Payments: Pay using your Amazon login details
Practical: Many shops offer Amazon Payments. You just need to click the button and enter your Amazon login details. Payment is by direct debit. The retailer also receives your address details. To pay using Amazon Payments, you need to have stored your banking details and address in your Amazon account.
+ Secure
+ Very convenient
– Only a few retailers offer this
– Need to have an Amazon account
Direct debit: The classic way to pay
You permit the retailer to debit the amount due from your account. To do so, you provide your account details and your consent. In the case of unjustified transactions, you have a certain period of time in which you can dispute them – which can take up to six weeks, depending on the bank. You’ll then get your money back.
+ Convenient & secure
– Only a few retailers offer this
Credit card: Great protection
It’s so easy: Enter your credit card number, validity date, and verification code – done. Although there are occasional cases of fraud, you can dispute unjustified credit card transactions.
+ Good customer protection
+ Widespread
– Credit card fees
Cash on delivery: Expensive and nonsensical
With cash on delivery, you pay once the courier has handed over the goods. The positive aspect is that you don’t have to go sending any sensitive data over the internet to the retailer. The negative aspect is that retailers often demand hefty additional fees. Furthermore, cash on delivery doesn’t offer you any guarantee that you’ll actually get what you ordered as you’re not allowed to open the parcel beforehand to check what’s inside.
+ Convenient
+ Secure
– High fees
– Only a few retailers offer this
Prepayment: Only good for the retailer
Avoid it at all costs! With this method you first receive an invoice which you then need to pay such as via a bank transfer. This means you’re transferring the money to the retailer before you even get a whiff of the product. There’s no guarantee that you’ll get what you’ve ordered, so if the retailer goes bankrupt you’ve also got virtually no chance of seeing your money ever again. On top of all this, you need to factor in long delivery times as to transfer the money alone can take anywhere up to three days – and the goods won’t be shipped until the money’s been received.
– Insecure
– Long delivery times
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