Are Electronic Payments Safe?

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The recent troubles at the Post Office may cause sleepless nights as you worry that those envelopes with checks may be just sitting somewhere, while the due date comes and goes. Maybe all those entreaties from companies to set up electronic bill payment aren’t such a bad idea?

We’re all familiar with using the internet to buy things, courtesy of Jeff Bezos and a host of other e-commerce titans. For the most part, this works very well. So, what is the difference in using the internet to transmit money to your electric company and cable provider?

There are two mechanisms for on-line bill payment. The first, usually offered by banks as well as those companies you want to pay, tells you when you have a bill pending. You can then go into the bank or company website, and authorize a payment, usually from your checking account. The payment is then usually transmitted to them electronically. If an electronic transfer isn’t possible, the bank will cut a regular check and drop it in the mail. 

The second method is used more often by the companies wanting payment. Here you give the company a credit card number, and when there is a bill due, your credit card is charged for the amount.

The first method is more secure by design, as you have to approve each bill before payment is sent. The second can be troublesome. The supplier can raise monthly charges and you may not realize it. You may stop using the service but forget to cancel the automatic charge. Also, using a bank’s website is generally more secure than those of independent vendors.

If you do decide to use electronic payments, check that the bank or vendor offers two-factor authentication. This added level of security requires you to enter a code in addition to your password when accessing the web payment site. This can be a text message to your phone, or a number you enter from an authentication app. Even in the unlikely event your user ID and password are stolen, the second factor of authentication will prevent crooks from accessing your information.

As a corollary to two-factor authentication, be sure to sign up for alerts from any entity that does your electronic payments. These alerts (email, text or phone call) are designed to make you aware of any behavior that is out of the ordinary, such as an overly large purchase, international transaction, or payment that is not part of a regular schedule.

Folks are wary of companies that store your credit card number online to be used for future transactions. However, this is a minor problem, as federal law limits your liability to $50 if you report an issue promptly. Most companies will not hold you liable for even that $50, as the goodwill gained is worth at least that much to them.

So, the bottom line is that electronic payments are a time and money saver (no stamps). They are actually more secure than the normal e-commerce we have been all doing for some time now. My recommendations (see above) will make this service secure. 

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