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Ways to pay online

We spent more than $3 billion in online retail sales last year. Just over half was spent with New Zealand retailers. This was up 13 percent from 2014.

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So if you’ve found the perfect present online for your favourite niece, or concert tickets for yourself, consider how you’re planning to pay. What protections does it offer? How secure is it? And what is it costing you?

Credit & debit cards

Credit and debit cards are the most popular way of making online purchases. But which is best for you?

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Direct deposits

Some businesses offer payment through direct deposits. You pay directly from your bank account to the seller’s bank account through internet banking. This can be a way to avoid credit or debit card surcharges. However, you won’t have any chargeback protections.

As the seller provides you with their bank account details, be careful you input them correctly. If the money goes to the wrong account, your bank can charge you an “electronic recovery fee” to try to get the money back. However, if a person receives the money by mistake, they are under no obligation to return it. All the bank can do is ask.

To read more, become a paying Consumer member or log in at the top of the page.

PayPal

PayPal is offered by many merchants as an online payment option.

Once you’ve created a PayPal account, you link your bank account, debit card, or credit card details to fund your payments. The merchant never sees these details – you just enter your PayPal password when you’re paying. You’re also notified by email when any transactions occur.

It’s free to use PayPal to buy something unless it involves a currency conversion. It can also be a way to avoid card surcharges as the retailers may not add it.

PayPal also has a Buyer Protection Policy. If an eligible item doesn’t show up or shows up significantly different than described, it’ll help you recover your money. You could also request a credit or debit card chargeback if you used them through PayPal. However, you can’t make a claim with PayPal and ask for a chargeback at the same time.

Our tips

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Report by Kate Sluka.

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Digital wallets

“Digital wallets” are a way to store your card information online. Visa Checkout, MasterCard’s MasterPass and PayPal are digital wallets.

Register your existing cards online and when you make a purchase from a participating merchant you won’t need to input your card or address details. You just enter a password when prompted and select which card and address to use. Visa Checkout and MasterPass even let you store each other’s cards with them.

Digital wallets are handy if you’re shopping on a smartphone, as it takes away the hassle of cramming your card number into a digital keyboard.

The only fees for using a digital wallet are those associated with making payment via credit or debit card.

Fraud protection

For an extra level of fraud protection, you can register your Visa or MasterCard with their verification schemes, Verified by Visa or MasterCard Secure Code. Kiwibank, ANZ and ASB cardholders are automatically registered.

When you buy from a participating merchant you’re prompted to enter a password or answer security questions. If someone else is trying to use your card details, they need to know the password or answers or they can’t proceed. Banks may implement it for all transactions or just those they think are unusual.

ASB also has Card Control where you can turn off the ability for online transactions. If a transaction is attempted, you receive a notification from ASB.

Banks also use software to monitor card transactions and alert them to suspicious activity – whether online or in-store. Banks can quickly block cards and contact the cardholder to check whether a transaction is genuine.

Complaints

Complaints about online shopping are on the rise. They made up a third of Fair Trading Act complaints to the Commerce Commission in 2014. If you have a problem with a trader advertising or selling in New Zealand, you have rights under the Fair Trading Act and Consumer Guarantees Act. If you feel claims are misleading or information is false, make a complaint to the Commerce Commission. If the goods you buy aren’t of acceptable quality or fail to meet the guarantees you’re entitled to under the Consumer Guarantees Act, contact the trader and ask it to put things right. If you can’t resolve it directly with the trader, you can lodge a claim with the Disputes Tribunal.

If you have issues with an overseas trader, inform the Commerce Commission and lodge a complaint with the international watchdog. Your complaints help 34 consumer protection agencies around the world spot trends and work together to prevent international scams. The site also has information about other steps you can take to combat fraud and resolve complaints.

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