So far, in our “Payment Systems” series, we have described fast electronic payments for payment by link and BLIK settlements for mobile. In the following article, we introduce online card payments. We present the advantages (and disadvantages) of this service, pay attention to security issues and list interesting functions that increase the attractiveness of this type of payment.

Why is it worth paying with a card online?

The reasons why customers choose to pay by card online are different:

• The speed and ease of carrying out transactions,
• There is no possibility to use other suitable payment methods in a particular case,
• Execution of foreign payments.

First of all , using a card online is one of the easiest and fastest ways to settle payments in online stores (except for Blik ). Although paying with a card online is not as easy as simply paying with “plastic” in a store at a point-of-sale terminal, it is still more convenient than entering the transfer details yourself. When it comes to speed, online card payments successfully compete with automatic transfers 

Often another reason for paying with a card on the Internet is the inability to choose our bank to make a quick transfer via the Internet: it is enough that the transfer operator chosen by his store does not have a signed contract with our bank (although this is a rare case). Then we are left with a traditional transfer, which extends the processing time of the order from one to several days, or cash on delivery (usually more expensive) or card payment .

The card is especially useful for foreign payments . Conventional cross-border transfers are expensive and slow; We cannot always use the services of an international express payment operator (eg PayU). This problem is solved by the card, because card organizations such as VISA or Mastercard operate almost all over the world.

Importance! Online purchases in a foreign currency involve currency conversion. Fees depend on the bank – the card issuer – and the card organization (Visa or MasterCard). Therefore, before the first purchases in a particular currency, it is worth checking with your bank what additional commissions will be charged. It’s also worth considering using a foreign currency card to complete a foreign transaction, linking the card to your PayPal wallet  or using fintechs offers, such as Revolut . A suitable solution is also debit card payments with favorable currency conversions . Thanks to this, we can save a lot on currency spreads.

Online card payment is one of the basics of e-commerce

Card transaction is one of the most chosen payment methods in stores and websites. From April to July 2021, up to 43 million transactions with a total value of 6.083 billion PLN were made using payment cards. A year ago, from July to September 2020, the number of such operations was 38 million, and their value: 4.9 billion PLN. For comparison, in the third quarter of 2019, we conducted just over 28 million transactions worth 3.5 billion PLN, and in 2017 – less than 13 million with a total amount of 2.1 billion PLN.

If we look back a few years, we will see equally strong growth. In the third quarter of 2015, the Poles requested to pay 6.7 million payment cards worth 1.1 billion PLN online, while four years ago (the third quarter of 2011) the card was used as an online payment method 1.7 million times, a total transaction value of 371 million Polish zlotys. This means that in 8 years the number of transactions increased more than 16.5 times, and their value – almost 9.5 times.

Of course, this jump can be explained by the explosive growth of the electronic market in recent years, the constantly growing number of stores and assortment on the Web, as well as the great wealth of customers. On the other hand, it must be remembered that cards are constantly accompanied by strong competition, such as the aforementioned express payment by link or Blik transfers (and also traditional methods, such as cash on delivery, are kept tightly). In the latter system, in the second quarter of 2021, 121.4 million transactions were made via the Internet (which is almost 70% of all operations carried out with Blik).

However, paying with a card on the Internet certainly does not go down. The undoubted advantages of the card are the possibility of creating periodic payments, for example on foreign services such as Netflix, linking the card to electronic wallets (such as PayPal) and constantly improving security. In addition, every bank in Poland currently offers cards for online payments, while only 14 commercial banks still offer Blik.

What cards can we pay online?

Until relatively recently, online card payments were associated with credit card use only. However, for several years we have been able to carry out this type of transaction using a regular debit card, regardless of whether it is convex or flat (it was not possible to pay with the latter in the network in the past).

Today, 4 types of cards are used for online payment:

Currently, all commercial banks offer debit cards with online payment functionality . In contrast, prepaid and virtual cards are rare in the market. Also check the types of payment cards .

Moreover, the cards can be linked to Apple Pay and Google Pay mobile payments and pay with a phone or other mobile device, without removing the “plastic” from the wallet.

Pay with debit, credit and prepaid cards

In the case of debit and credit cards, the biggest difference lies in the way the debt is collected. When we pay by the “debit” in the store, our account is basically debited immediately (ie: the transaction amount is frozen until the bank receives confirmation of the transaction. We will write about the technical details later in the article). As you know, it is necessary that you have sufficient funds in your account, otherwise you will not be able to complete your purchases.

On the other hand, when we pay with a credit card, our account is not charged at all, and the debt increases with respect to the limit given to us by the bank. In this case, you should remember to repay the debt in time (in the so-called interest-free period), otherwise the bank will charge us a lot of interest for late payment.

Prepaid cards were a convenient solution, too. We were able to pay the amount specified by us to the prepaid card account, thus exercising better control over our expenses and reducing losses in the event of money being stolen from the account. However, prepaid cards ran into several problems; When shopping online, the name and surname must be provided on the card, but prepaid cards were issued to the holder and this data was not on it. Often times the transaction system may not recognize this payment method.

However, the sale of prepaid cards was limited for completely different reasons: the Polish Financial Supervisory Authority (KNF) recommended to stop issuing them, as these cards may become a tool in case of money laundering. Currently, prepaid cards make up only about 5% of all cards used in Poland (2.2 million copies for nearly 36.6 million debit cards and 5.3 million loans). No wonder, since you can get it in a few banks, such as ING Bank Śląski, and most often these are “plastics” for children, whose parents credit their accounts (such as PKO BP).

Virtual Card Payments

The virtual card is used only for online payments (as well as for orders by mail or phone); You cannot pay it at the station or use it at an ATM. Often, it does not have a physical form at all. Some banks send “plastics” with your data, others send you a document with the most important information; The card is only present in the bank’s computer system. Even a “plastic” figure is devoid of a magnetic stripe and hologram and it is impossible to generate a PIN code for it.

Operation of the card is a bit like operating on prepaid cards; In order to be able to pay with a virtual card, the appropriate funds must be transferred to her account.

Advantages of virtual cards

The use of a virtual card in the network is no different from the use of ordinary “plastic”. Having a virtual card greatly increases security: the risk that someone suspects your codes and data, for example, when you pay in a store or at a ticket machine, is basically reduced to zero (as long as the card is stored securely, of course) . You also won’t fall victim to skimming (for more information, see How to Use a Payment Card Safely ).

Transactions, as in the case of physical cards, are protected with CVC2 or CVV2 tokens, and data transmission is secured using an encrypted SSL protocol. You can set the card limit yourself and create a transaction confirmation. Most importantly, in the case of a virtual card, there are no special restrictions on the customer, as in the case of credit or prepaid cards.

Disadvantages of virtual cards

The biggest drawback of virtual cards is their availability. Despite the fact that the first virtual card appeared on the Polish market in the early 2000s (in Invest-Bank, now – Plus Bank), this product did not gain much popularity. In 2010, there were only 103.1 thousand virtual cards in Poland. Only recent years have made a big change and now their number exceeds 2 million, which is just over 5% of the market (NBP data for Q2 2021). However, still only a few banks offer virtual cards, incl. ING Śląski Bank and mBank. At ING, the fee for “issuing” the card is PLN 20, but its use is free.

electronic wallets

If you pay frequently online, even for small payments like public transit ticket fees, you may want to consider an e-wallet such as Visa Click to Pay or Mastercard’s Masterpass . You can connect several cards to the electronic wallet, even from different issuers, thanks to which you can quickly and securely access your debits and loans without having to fill in the card details each time (sometimes it is also useful to follow the websites of card operators, Because they are willing to promote their wallets and because daily payments offer rewards or redeem cards in the promotion).

For more information, see Cryptocurrency wallet – how to set it up and how does it work?  .

How is card payment made online? Step by step instructions

As mentioned earlier, paying with a card online is not a complicated process. First of all, when choosing a payment method while shopping, instead of a bank transfer or quick transfer via the link, click on the image of the card we have: VISA or Mastercard.

Then we need to provide data like:

• name, surname, and sometimes title as well,
• card number,
• card expiration date,
• CVV2 / CVC2 security code (a three-digit code on the back of the card).

Providing this data is to prove that we are in fact the owner of the debit or credit card and that it is in our physical possession.

We don’t always have to fill in all the details on the card; Many stores only require data to be filled in once, and the system automatically fills in some fields during subsequent purchases – if we agree to leave the card details in the app. This is a very practical solution if we buy regularly and trust the online store, as well as with different subscriptions, for example for games or channels with series (Steam, etc.).

In the latter case, we can even set the automatic payment option for the subscription; The service provider will regularly charge our card the necessary fees, and you do not need to worry if our subscription has expired. However, it is important to keep in mind that with automatic billing it is difficult to control all our expenses, and it is good to have an overview of all our subscriptions and other services that are renewed from time to time.

Importance! At this point, the system will probably also suggest saving the card data in a web browser (eg Chrome). However, storing this information in browsers is not recommended.

What does card payment look like technically?

What often marks the end of a transaction for us – customers – is actually just the beginning of the payment process. Once you enter our “plastic” data, the card is initiated by the billing agent (eg PayU); Verify the correctness, correctness and correctness of the data provided. The whole process is fully automatic.

Next, a question is sent to the bank whether we have enough funds in our account or on a credit card to pay for purchases. If everything is correct, the bank blocks the required amount and sends notes to the agent. At this point, the transaction has not yet been posted, that is, it is not visible in the transaction history, and the indicated amount reduces the available balance so far.

The transaction is posted when the bank receives the settlement of the transaction. If this does not happen, the funds will be unblocked, as the bank decides that the transaction has not been completed for some reason. How long does the bank wait for such a confirmation? In the case of cash and non-cash transactions, this time is 7 days, and in the case of virtual transactions – up to 14 days.

Interesting fact: transactions are often settled only when the goods are sent to the customer.

Chargeback service – a plus for card payers

Chargeback is a service available only to Visa and Mastercard cards. It consists of a refund from the seller’s account if the goods you purchased do not meet your expectations: they were defective, differed from what the seller promised, or you did not receive them at all . If your attempts to exchange the goods in the store are unsuccessful, you can ask the bank that issued your card to resolve the dispute.

The chargeback procedure applies to all transactions with VISA and Mastercard cards, not only in the network, but also in stationary stores, for telephone orders, and even in the case of cash withdrawals from an ATM or a bank branch (this does not apply, however clean development mechanisms).

The chargeback service is completely free and safe for the customer. The Bank conducts an investigation on its behalf based on a complaint submitted by the customer. The complaint is sent to the settlement center (the so-called buyer ), which contacts the seller.

On the other hand, from the seller’s point of view, a chargeback procedure that has been effectively implemented – and thus justified – is very expensive (then all banking costs must be covered), which may also discourage unfair practices. This does not mean, however, that sellers are helpless when facing the bank. In addition to the obvious concern for the quality of the product and the transparency of the offer, they can use other ways of working: if they do not agree to the chargeback request, they can submit the relevant documents that prove that the customer is wrong or that he intentionally misleads the bank (such as confirmation of shipment and delivery of goods). and refund, terms and conditions accepted by the customer, etc.). In addition, the bank gives them two weeks to respond to the complaint; If they do not respond to the request within this time, a chargeback will be accepted.

You can learn more about this in our article Prepaid Card – What is it?

Is online card payment a safe solution?

Many myths have arisen about card payments; Either enthusiastic reviews appear on the Internet, the authors of which argue that paying with “plastic” is absolutely safe, or even warnings against using this method. What does the security issue really look like?

Well, the issue is by no means clear. The truth is that both banks and acquirers do their best to ensure that customers’ money and data are safe and that third parties cannot access them. For this purpose , an SSL-encrypted connection is used for all transactions . You will recognize them by typing: http s :// (not: http:// ) and the lock symbol. Visa and MasterCard card institutions also impose additional restrictions on companies that provide payment services, such as the PCI-DSS certification system.

However, it is not difficult to notice that the required card verification procedures, such as the owner’s name, card number, and security codes, are completely useless if the card falls into the wrong hands. Not only that, it is not necessary to steal the card: it is enough for someone to take a “plastic” picture with a mobile phone, for example, an dishonest seller in a store, and can make unscrupulous payments on the Internet – at least until we realize that the account funds are running out. However, it should be noted that in such a situation it does not matter at least whether we use our card on the network or not; We are in the same risks, even though we only pay by card at regular POS machines. However, some people underestimate this threat, and they can post photos of the newly received card even on … Facebook.

Dual process authentication

As of September 2019, every card payment in the network requires additional confirmation in the mobile application – by entering a PIN or biometric data (such as a fingerprint). Strong authentication is a guarantee of security at the same level as making standard transfers from your online account or mobile banking. All you need – although that would seem counterintuitive – you should always pay attention to what you click and carefully read the content of incoming notifications. It is easy to forget quickly, and often we instinctively emphasize something – this is what criminals prey on.

There are some exceptions to the two-step verification principle for online payments. Banks may withdraw from it when you pay for small amounts (up to PLN 50), pay recurring orders (such as bills) or in select, trusted stores where you often shop. However, it will be up to the bank to opt out of the two-step verification in a particular case.

Online transaction amount limit

One of the best ways to protect yourself not from theft as much as from losing a large amount of money from your account is to set a limit on the amount of online transactions. Banks offer different options:

• time limit, which is the maximum amount that we can spend on the Internet in a day or month;
• Single transaction limit, which sets the maximum amount of each payment on the network.

Thanks to this solution, we can be sure that even if someone uses our card dishonestly, they will not erase our entire account, but will steal the amount that we set for ourselves at most. We can set separate limits for individual transaction types: for cashless payments, ATM withdrawals, and online transactions, including those made with a card. 

It should be remembered that the amount limit is usually not imposed by the bank from top to bottom or by default is set as high as possible (for example, in PKO BP we can spend up to 10,000 PLN per day). If we want to secure lower amounts, we must limit the amount ourselves . However, it is not the same everywhere, for example in the cooperative banks of the BPS group, for security reasons, a limit of PLN 0 was introduced for all debit cards; In order to pay by card in the network, the customer must change these settings with the help of a telephone service.

We set limits on individual payment types easily and quickly in our bank’s online banking (usually on the Card or similar tab) and over the phone. Often, banks themselves impose an additional limit on the amount, for example in ING Bank Śląski we can set a limit of PLN 0, PLN 500, PLN 1000, etc. up to 10,000 PLN. PLN or even the balance in the account. Unfortunately, for example, in Getin Bank, it is impossible to set a separate limit for online transactions at all and this also requires disabling the functions of the contactless card, which will be a serious drawback for many of us.

It is a good practice, especially if we occasionally make online purchases, to restore the cap to PLN 0 after making a payment. In such a situation, unauthorized use of the card on the Internet will be almost impossible.

Importance! In modern banks, setting limits should be free. It is worth making sure, according to the official schedule of fees and commissions, the rules in force in our bank and that the bank will not charge us for the service, which is one of the basics when it comes to security issues.

Also Read Limited Transfer i.e. How Much Can You Transfer From Your Bank Account? And how to  change the withdrawal limit from ATMs in different banks?

3D Secure, no additional transaction security

The above mentioned bugs and threats related to card payments can also be partially eliminated through the 3D Secure service. An additional security for online payments is the need to approve the transaction with a verification code sent by the bank in an SMS – similar to online transfers.

3D Secure is already a standard in the Polish market; This security was already provided by all commercial banks and most of the cooperative banks (initially it operated, among others, at mBank, PKO BP, Deutsche Bank, Millennium Bank, ING Bank Śląski, SGB bank and Citi Handlowy). This service is not always automatically turned on for cards that are already turned on, so if you are not sure if you can use it without any problems, please contact your bank.

A big drawback of the 3D Secure service is its limitations: not only the bank must provide this solution, but also the store where you intend to shop . If the merchant does not implement this standard, you will not be asked for an additional authorization code for the transaction, even if this service is active for your card (this happens, for example, when we use the services of a store located in China).

How do you know if a store also uses 3D Secure? The following signs should appear on its page:

Thanks to this, you can be sure that your card payments will be carried out in the most secure way.

Principles of secure online card payment

It is important to realize that even the best verification systems will not be effective if we, as customers, ignore basic security principles. Always follow these rules for cards and online payments:

1. Do not share your card with anyone, especially third parties. It is easy to write down or photograph the data from the card.
2. Never provide your card’s PIN when making online transactions. The PIN is only used for transactions at ATMs and POS terminals. The online store will not ask you to.
3. Only enter your card details at the store where you pay. Remember, the bank will never ask for your card details, even after you log into your account.
4. When paying online, always pay attention to whether the connection is encrypted (https:// protocol and lock token).
5. Consider introducing a limit on the transaction amount in the network or setting it to PLN 0 – thanks to this solution, you will reduce losses in case of theft or avoid them at all.
6. Ensure that the store meets all security requirements and uses additional security, such as 3D Secure.
7. Update your antivirus and operating system regularly. Use legal software.

For more helpful security tips, check out our Risk Free Banking series .

Summary

Using the card online is a simple and free way to pay for purchases. Card transaction is much faster than a traditional transfer and is a good alternative to automatic link payment transfers. “Plastic” is especially useful for external transactions, as it helps to save time and money.

At the moment, the online payment card is not only a credit card, but also a debit card, which we access in our account as a standard. There are also virtual cards that are used only for online payments, and in some places for prepaid cards, although the popularity of these types of cards is much less.

Is online card payment safe?

The security of online card payments has always raised some doubts; While the transaction systems are very well protected, security in the form of the requirement to provide data from the card was not enough when the payment card fell into the wrong hands or someone intercepted our data.

In this case, a very useful solution was and remains the amount limits for online transactions, which will reduce losses or – when the limit is set to PLN 0 – prevent the thief from paying with our card. In addition, the requirement for double-authentication of transactions in the mobile application has significantly increased customer protection and made card payments similar to online transfers in terms of protecting customer funds.

Learn about the types of payment cards here

The article uses NBP reports:

Payment Cards Information, Q2 2021

Information on payment cards for the third quarter 2020

Information about payment cards third quarter 2019

Information on payment cards third quarter 2017

Information on payment cards third quarter 2010

Information on interbank settlements and settlements in the second quarter of 2021.

Information on interbank settlements and settlements in the third quarter of 2020.

Information on interbank settlements and settlements in the third quarter of 2019