payment methods

Pay with a Selfie: How Safe Are the New Ways to Pay?

Damian Davila — Fri, 17 Feb 2017 10:31:16 +0000

In 2016, more than half of all purchases in the U.S. were made online instead of at a brick-and-mortar store. From selfie-payments to Facebook Messenger bots, there is now a long list of unusual ways that you can pay the water bill or complete your grocery run for the week.

But how safe are these new ways to pay? Let's take a closer look at how some of these new payment methods work, and what you can do to make them even safer.

1. Facebook Messenger Bots

Colorado-based fintech company BillHero was the first to leverage a Facebook Messenger chat bot to pay bills via chat commands. Later on in September 2016, Facebook enabled all of the 34,000 plus developers on the platform to support payments. The social media giant is working with several players in the credit card industry and fintech, including Visa and Braintree, to process all types of payment options.

By opening the gates, Facebook allowed U.S. customers to complete a wide range of other transactions and purchases on Facebook Messenger. In a nutshell: The chat bot lets you know about a product that you might be interested in, and provides a "buy now" button. When you click it, it takes you to a checkout screen with your shipping information and payment method for you to review. Boom! Just like that, you're ready to pay.

But Is It Safe?

Well, Facebook Messenger payment bots are covered by the same level of security as all other Facebook products. All transactions using a Facebook chat bot are encrypted or processed through a trusted third-party payment processor, such as PayPal or Stripe, to protect your payment information, such as your card number or CVV. Also, transaction confirmations from a bot will restrict your information, such as only showing the last four digits of your credit card number.

How to Make It Safer

Your first line of defense starts with your Facebook password. Facebook recommends building a password that has at least six characters and is a complex combination of numbers, letters, and punctuation marks. When a password isn't strong enough, the app will let you know. Also, make your Facebook password different from those you use for your online banking, investing, or retirement savings accounts. (See also: 3 Sneaky Ways Identity Thieves Can Access Your Data)

A second tactic is to turn on login alerts so that you receive an automated alert when someone tries logging in to your Facebook account from an unrecognized device or browser. A third is to require a password or PIN whenever sending money or making payments in Facebook Messenger.

2. MasterCard Selfie Payments

Speaking of passwords, MasterCard believes that they cause too much hassle and presents the option to pay with a selfie. The "selfie pay" technology was first tested in the Netherlands, the U.S., and Canada and will be rolled out gradually across the world throughout 2017.

Through a smartphone app, shoppers can confirm a purchase by taking a selfie and letting the facial recognition software verify their identity. According to MasterCard, 71% of users rated "selfie pay" highly during trials.

But Is It Safe?

To prevent somebody from just holding up a picture of you and getting away with a $1,000 shopping spree, the app requires you to snap the picture after you blink or shake your head. Then, the app compares the selfie with stored algorithms of your face to identify you. During the trials, 73% of users believed that "selfie pay" will reduce fraud and 90% of them would use it in the future.

How to Make It Safer

Since "selfie pay" is still in the process of being rolled out, there's little that we can do as of right now. If taking selfies isn't your cup of tea, MasterCard also plans to provide a fingerprint confirmation option with the app and is currently testing voice and cardiac rhythm recognition.

3. Amazon Dash Buttons

Connected to your home's Wi-Fi, the Amazon Dash Button allows you to reorder many of your favorite products with a simple click. To set up each Amazon Dash Button, you'll need to download the Amazon app on your Android or Apple device, connect the Dash Button to Bluetooth, and also enter your Wi-Fi information. Some Dash Buttons don't support Bluetooth connection, and use your smartphone's Wi-Fi connection or speakers instead.

Currently, the button is only available for Amazon Prime members, costs $4.99, and provides you with a $4.99 credit after your first order. There are hundreds of products to choose from including Charmin, Doritos, Greenies Dog Treats, and Red Bull! Once you click the button, an indicator light will turn green when your order is successfully placed, or red if there was a problem.

But Is It Safe?

A device that connects seamlessly to your Wi-Fi, smartphone, and Amazon account — what could go wrong? While there are plenty of folks that have hacked their own button to do anything from turning on lamps remotely to ordering pizza with one click, there are currently no reports of malicious hackers tapping into another person's Amazon Dash Buttons.

How to Make It Safer

Turn on the "order protection" feature on your Dash Button to prevent a new order from being placed until your prior order is delivered. This way you can prevent your spouse or son from tripling an order of detergent on the same day.

Consider turning on the email notifications of your Amazon orders so that you can cancel any orders that you don't recognize.

And it should go without saying, but set a strong password for your Wi-Fi and update that password at least once a year.

4. Chip Cards

No other new form of payment has generated more discontent from American consumers. From the confusion about swiping or inserting, to the awkward conversation with cashiers while waiting for your card to be processed, there is a list of reasons these metallic chips are considered an annoyance by many.

However, the reality is that chip cards are far from being a new way to pay. They have been reducing fraud in over 130 nations around the world for several years. So, the U.S. is just playing catch-up. As of April 2016, Visa had issued roughly 265 million U.S. chip-enabled credit and debit cards, and MasterCard had upgraded about 70% of its U.S. debit and credit cards to the chip format.

But Is It Safe?

The evidence clearly indicates that chip-enabled cards reduce fraud. Visa has reported that among the U.S. merchants who were suffering the most instances of card fraud at the end of 2014, those that began accepting chip debit and credit cards saw instances of card fraud fall 18.3% as of the fourth quarter of 2015. On the other hand, some of the U.S. merchants who opted not to upgrade payment terminals to process chip cards experienced an increase in instances of card fraud of 11.4% for the same period. (See also: 4 Ways Chip Credit Cards Make Life Easier)

How to Make It Safer

Simple: Opt to use your chip-enabled cards over those without a chip, and choose merchants with chip-enabled payment terminals over those who are still holding out. As with everything else, strength comes in numbers. Only when chip cards have become the norm across the nation can we all reap the enhanced security benefits of chip technology.

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Reasons Paper Checks Are Still Relevant

Qiana Chavaia — Wed, 30 Mar 2016 09:30:30 +0000

People are beginning to think of paper checks as nearing their death. But, could they possibly still have good uses?

According to a GoBankingRates survey, 37.8% of respondents revealed that they don't write checks and only 16.1% said they write checks at least once a month. Paper checks are especially unpopular among younger generations. Nearly all Millennials polled responded that they "never" write checks — roughly 95.7%.

However, here are five reasons why you want to hang on to a book of paper checks. They just might still be relevant.

1. Bridge Cash Payments

Some smaller retailers simply will not or have not adapted to modern payment methods, like PayPal and for cash payments. Of course, you can always keep your debit card handy, assuming the cash is in your account at the moment of purchase. Unfortunately, it doesn't always work that way with money, and you might need a day or two between transfer times. Paper checks are a great way to bridge cash payments during transfer times, although this is risky, and not a practice to make into a habit. (See also: 6 Mobile Payment Tools You Should Start Using Today)

2. Making Housing Payments

Although many large commercial properties have adapted to innovative technology that allows tenants to make payments online, many smaller landlords have not. Furthermore, many don't have plans for accepting online payments and will only accept deposits and rent in the form of paper checks and/or money orders and cashier's checks.

3. Avoiding Fees

Money orders and cashier's checks are costly — averaging anywhere from a couple of bucks to $10 for a cashier's check. That's a waste of money, especially if you're in the at-least-once-a-month camp. Not to mention the waste of time it takes to run out to the bank and/or store to pick them up. Intelligent money starts with streamlining bill payments and savings processes. (See also: 5 Online Tools to Manage Your Money in Under 10 Minutes a Week)

4. Stopping Payments

When you need to make a stop payment on a check, it's as simple as contacting your bank and making the request. Some banks charge as much as a $25 to $35 fee for stop payments. However, there may be instances where you need to cancel a payment and it's just not an option with money orders and cashier's checks, where the payment must be made once it’s properly presented at the issuing bank.

5. Keeping Better Records

Paper checks are linked directly to your bank account and records of them are kept on file. This isn't the case with money orders and cashier's checks, where you have to hang on to carbon copy receipts as proof of payments (those carbon copies get worn out and become illegible after a while). With today's sophisticated banking technology, you can easily download copies of checks written from your account as PDF files.

Do you still use paper checks?

This article is from Qiana Chavaia of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Times Credit Cards Are Smarter Than Cash

Qiana Chavaia — Fri, 07 Aug 2015 13:00:12 +0000

We've all heard the admonishments about over-reliance on credit cards. If you don't dutifully pay-off your bill in full every month, debt can quickly mount, and wreck your budget — along with your credit.

Assuming you use credit prudently, however, it can often be a better bet than cash. In fact, the benefits of careful credit card usage are so great, that they often outweigh the simplicity of cash. Here are five solid reasons why credit cards can make more financial sense than cash.

1. They're Safer Than Cash

There are some who feel that cash is safer than cards, but what happens when your cash is stolen or misplaced? There is no getting it back. There is 100% liability on your end and all is lost. Credit cards, on the other hand, offer myriad protections, giving you peace of mind when your card is lost or stolen. You're also able to track purchases and spending more efficiently, and spot fraud or card misuse.

Sure, hackers can steal your credit card information, and a lost card presents challenges of its own. But there's no financial institution ready to help when you lose cash. Credit cards come with the backing and help of professional staff trained and equipped to handle such situations.

2. They Help Build Credit

As much as we fear over-using credit, not having any credit can have its own repercussions. Lack of credit can hamper your ability to take out necessary loans (such as auto loans or mortgages) and even limit more basic things, such as rental car options. Have you ever thought about renting a car, but all you had was a debit card or cash? From my experience, many companies such as Hertz or Enterprise will do a soft credit check to see if you are eligible for the rental. Plus, having established credit also gives you a shot at better interest rates and expedites approvals on loans. (See also: How to Use Credit Cards to Improve Your Credit Score)

3. You Can Earn Cash Back or Travel Rewards

Many credit card companies offer cash back incentives — some as much as 6% on grocery purchases, or even 5% on shopping purchases. Cash back incentives add up and you'd be amazed after 90 days just how much cash back you've earned. That cash is yours to keep — no strings attached. (Check out one of our favorites: Citi Double Cash Card)

A travel rewards credit card can get you even more value from your purchases. Redeem your earned miles for free flights, stays, and upgrades. In addition, many cards include travel perks like priority boarding, exclusive lounge access, free checked baggage, and more. (Check out our favorite travel card: Chase Sapphire Preferred Card)

4. There Are Insurance Protections

Credit cards also offer insurance perks. Just by using your credit card you have access to multiple insurance options, such as supplemental insurance, lost luggage insurance, travel and accident insurance, and more. Plus, some credit card companies also give you the ability to halt or reduce payments during periods of change or difficulty — such as a relocation, new baby, new job, unemployment, or death in the family.

5. Cards Offer Purchase Tracking and Customer Service

Credit cards enable you to more efficiently track your purchases, and let you dispute payments should problems arise. Plus, credit card companies' customer service hours extend well beyond those of your local bank branch, allowing you to resolve issues at any time. And though ATMs can be used 24 hours a day, for larger purchases, credit cards facilitate bigger spends at any time of day.

When else do you prefer to use cards over cash?

This article is from Qiana Chavaia of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: