Pay it safe: A guide to secure online payments

From ordering groceries to booking travel, these days people can make quick and seamless purchases with just a few clicks. But as transactions move from physical card swipes to digital keystrokes, making secure payments is increasingly important.

In 2023, authorities received more than 14,000 reports of online shopping scams, with almost half of those reports resulting in financial losses that cost Australians almost $6 million.¹ The right tools and knowledge can help people avoid this and make secure online payments.

In this article, learn about online payment security, including:

• What a secure payment is
• How to check if a website is safe
• How secure payment processing works
• Examples of secure online payment methods

What is a secure online payment?

Secure online payments typically contain safeguards to help people protect personal and financial information. When shoppers enter their payment information or other sensitive personal details to buy something online, a secure checkout and online payment method can help protect this data.

Steps for making secure online payments

Wondering how to check if a website is safe? When shopping online, consider potential signs that may indicate online transaction security, such as:

• Seek the shop’s official site: Make sure to navigate to the shop’s official website. If unsure, try to search for it in a separate tab. Avoid clicking on links from advertisements or spam emails.

• Check the website address: Ensure the website’s URL begins with "https://" rather than just "http://". The "s" stands for secure and can signify that the website has an SSL certificate installed. SSL certificates verify a website’s authenticity.

• Looks for padlock icons: Check if there is a padlock symbol in the browser’s address bar or the lower-right corner of the webpage. This can indicate the website has a secure connection.

• Review privacy policies: Many safe shopping websites have a privacy policy that explains how consumers’ personal information is handled and protected.

• Look for security standards: Check if the site meets global industry standards for protecting customer and payment data, such as the Payment Card Industry Data Security Standard (PCI-DSS), which compliant Australian businesses normally participate in.

Running through the checks above can help keep payments secure. However, shoppers may need to be extra careful because scammers may be able to fake some of these aspects to lure people into entering their payment details. The Australian government may soon update payments regulation to help the Reserve Bank of Australia (RBA) counter new risks related to payments.²

How does secure online payment processing work?

Transport Layer Security (TLS) and Secure Sockets Layer (SSL) can create a secure and encrypted connection between a website and someone’s web browser.

These protocols help create a safe environment for transmitting sensitive information. The two layers work via a process called the TLS/SSL handshake, which can establish a secure connection and allow for encrypted data transmission.

Websites using these protocols can usually be identified by the “https://” in the URL. And they often display a padlock symbol in the browser’s address bar. These visual indicators can help assure users their payment information is being transmitted over a secure connection — but as mentioned earlier, some scammers may even attempt to fake these visual indicators. Be extra vigilant.

What are some secure online payment methods?

By prioritising secure online payment methods, people may be able to shop with peace of mind. Examples of safe ways to pay online include:

Debit and credit cards

Whether for retail store shopping or buying goods online, debit and credit cards are generally considered a secure payment method because they usually comply with the PCI-DSS.

What might make debit and credit cards more secure than cash? Here are a few potential security benefits when shopping with a credit card:

• Built-in card security: Debit and credit cards have built in security features to protect transactions, including EMV chips and card verification value (CVV). Shoppers may also be able to enable additional security features, such as multi-factor authentication, through the bank that provides their cards.

• Fraud monitoring: Credit card companies and banks may employ fraud monitoring systems to help detect and avoid fraudulent activities.

• Recover lost funds: If cash is lost, there is likely no way to recover it. However, credit cards may offer a layer of protection against such losses, enabling cardholders to dispute unauthorised pending charges and protect funds.

Virtual credit cards

A virtual credit card can be used as a temporary digital payment method. Typically, they contain a unique card number, expiration date, and CVV, separate from a cardholder’s physical credit card.

Because they are designed for single or limited use, people can typically generate a new card for once-off payments or transactions, which can make this option convenient for safer online shopping.

Since these card numbers are distinct from physical credit card details, they may help reduce the risk of exposing card information to potential scammers, card skimmers, hackers, or other criminals.

Digital wallets

A digital wallet can be another secure and convenient payment method. They can store payment information, such as credit card details, bank account information, and digital currencies. Some people may use a digital wallet instead of a physical wallet or purse, allowing them to make online purchases, in-store payments, peer-to-peer (P2P) payments, and bill payments on-the-go with smart devices.

For example, with the PayPal digital wallet, people can spend, send, and manage transactions from almost anywhere. And they may gain Purchase Protection, depending on the transaction.

For security, digital wallets typically use advanced encryption and authentication techniques. Instead of sharing the actual payment details, digital wallets may use a token or a unique identifier to complete the transaction.

Prepaid cards

A prepaid card can allow people to load funds onto the card in advance. Because they’re not linked to a bank account or overdraft, the potential for financial loss may be limited to the amount of the card’s balance. By using a prepaid card for online transactions, people can keep their everyday bank account information separate from digital purchases.