Am I free to choose how I want to pay?
Credit card, invoice, instant transfer: everyone has their preferences, including when it comes to paying. But that doesn’t mean that you can always pay the way you like best. The reason: Online shops can determine which payment options they offer. “Consumers have no right to what they have preferred payment method“, says David Riechmann, specialist lawyer for banking and capital market law at the North Rhine-Westphalia Consumer Center. However, the providers would have to inform how payment can be made on the website at the latest when the ordering process begins. However, it could happen that a provider does not do so when ordering and entering the personal data makes a purchase by invoice dependent on how the credit check turns out, i.e. how the customer’s ability to pay is assessed.
What are the advantages of paying by invoice?
Riechmann always recommends purchasing on account, which is usually sent by email or enclosed with the goods. This is by far the best solution for customers: “The customer can first look at the goods, check whether everything fits, complain about any defects if necessary and then pay if the goods are found to be good.” If problems arise, buyers would not have to go through the hassle of demanding the money they have already transferred back. In addition, if no other payment service provider is involved, customers can contact the retailer directly with complaints. However, there is a catch with this payment option: It is not offered by many online shops because, in the worst case scenario, they have to struggle to collect money, customers do not pay on time or the merchants themselves can more easily become victims of fraudsters.
What are the advantages of direct debit?
When paying by direct debit, the money is usually transferred before the goods are received. The customer enters their own bank details, i.e. the account number or IBAN, in the ordering process and gives the dealer permission to debit the amount due from the account. The lawyer Riechmann puts this option in second place: “This is also a good, convenient solution, especially because you can have the money back for up to eight weeks.” It’s not that difficult: According to Stiftung Warentest, the customer only has to instruct their bank in writing to get the incorrect or unauthorized amount debited back. The bank needs the amount, the date of the debit and information about where the money went. You can often arrange for the money to be returned and credited again using online banking.
Which payment option do consumer advice centers advise against?
Some companies want to see money first and then deliver the goods. This procedure is called paying in advance. This only has disadvantages for customers: If the goods sent are not as desired, it can be tedious to request the money sent by bank transfer back. Packages that have already been paid for cannot arrive, and even worse: you can fall for fraudsters, such as so-called fake shops. They just want to collect money, don’t deliver any goods and therefore prefer to pay in advance. “If, for example, an online retailer only offers advance payment when paying for a smartphone, I would definitely not shop there,” says specialist lawyer Riechmann.
How do I recognize fake shops?
Fake shops look deceptively real and their offers – often electronic devices – simply appear so attractive and cheap that it is almost too good to be true. But how can you recognize such fraudulent providers? The Stiftung Warentest advisesAlways check important indicators: a missing, incomplete or incorrect imprint, for example, is an indication of a fake shop. However, fraudsters are now also copying the complete legal notice of real existing companies. A missing data protection declaration is also an indication of dubious intentions on the part of the provider. The product testers warn: “If a price is disproportionately low, there is often a fraudster behind the offer. This is especially true for branded goods. Discounts of up to 90 percent are unrealistic.” The foundation advises you to google the retailer if you have any doubts. If it is a fake shop, there may already be complaints from duped buyers. The North Rhine-Westphalia consumer center has one Fake shop finder developed. Any website can be checked there.
How safe is paying with a credit card?
Paying with a credit card has become safer. Offline, because when paying at the cash register or in a restaurant, you now always have to enter your PIN if the amount is over 50 euros. Online because of the double security barrier. “Before 2019, before the introduction of two-factor authentication, it was enough for a fraudster to take a photo of both sides of a credit card and then he could happily go shopping with the numbers,” says Riechmann. Today, criminals can no longer do so much with a credit card alone. Although you share your personal credit card details with the online shop, fraudsters have a much harder time than before due to two-factor authentication.
Two security steps are always necessary to approve a payment. When releasing with a bank app, the user installs the house bank app for authorization on their own cell phone. The app is linked to your own bank account. Access to the app is possible via fingerprint, facial recognition or a code. When paying, the user approves the purchase via the app. There is also the option of storing the credit card virtually on the smartphone and paying via Apple Pay or Google Pay. Either way, with both payment options, authentication takes place in two different ways: firstly, users must have a device in their possession and secondly, they must know how and by which means payments are approved.
Another hurdle for criminals: If shopping online with credit or other payment cards costs less than 30 euros, two-factor authentication can be omitted. But it would be noticeable if a thief repeatedly spent less than 30 euros on purchases. “After five payments under 30 euros or purchases with a total amount of 100 euros, additional authorization is required again,” says Riechmann.
Can fraudsters override two-factor authentication?
This is also possible, especially if the double authentication takes place via a device, usually a smartphone. “If criminals manage to steal the smartphone and spy on the unlocking code, they can go on a shopping spree at the owner’s expense,” warns Riechmann. Users should always be aware that a smartphone with a bank app is like a wallet. “If a cell phone is gone, your wallet is gone too,” says the consumer advocate. In such cases, he advises having the stored accounts blocked to be on the safe side. This also applies if a smartphone or watch that can be used for contactless payments is lost. There is additional protection here too: when contactless numbers At the checkout with debit cards or credit cards or with special smartphone apps, an unlock code, fingerprint scanning or facial recognition must be entered for amounts of more than 50 euros.
Expert Riechmann warns: “If I only use one device for my financial transactions or transfers, I am more vulnerable.” Fraudsters would have an easier time if they received TAN numbers on the smartphone, which is also used for banking transactions. He thinks it’s safer to use two devices, such as a laptop and smartphone, or to also use a tan generator, which you can buy at your bank or savings bank. The perpetrators would have to make a significantly greater effort, “because they ultimately have two devices manipulate or hack must”.
What about Paypal?
Online payment services that connect customers and retailers are now very popular. Paying should be quicker, safer and less complicated. Only the respective service provider receives the customer’s personal bank details; online shops do not learn anything about it. The payment service of the US company Paypal is used particularly frequently in Germany. Advantages: The goods will be shipped quickly after payment. With Paypal you can easily send money across national borders. You don’t have to re-enter your payment details every time you shop online.
However, the consumer advice centers warn: “Fraudsters can use your Paypal password and email address to shop unhindered in online shops if you have not set the two-stage verification.” Another disadvantage: If the goods do not arrive or do not correspond to the offer previously made, the money will be refunded. However, this buyer protection only applies if the “Goods and Services” function is set during the payment process. Stiftung Warentest advises: “No matter how honest a seller appears, never pay using the Paypal ‘send money to friends and family’ function.”
What about Klarna and other providers?
When purchasing online, it is often possible to pay via the Swedish service provider Klarna. The company offers purchase on account, by instant transfer or by installment payment. The user does not have to create an account with Klarna; the money is transferred directly to the payment service and the retailer can then quickly send the goods. There is also buyer protection here. However, consumer advice centers repeatedly report complaints about Klarna, for example because customers have accidentally agreed to pay in installments. The consumer advice centers warn: “Payment in installments is viewed as a loan and can have a negative impact on the Schufa entry.”
If you don’t want to use Paypal or Klarna, you can also use German providers such as Giropay or Paydirekt. Both payment services work directly with the credit institutions; personal bank details are not passed on to third parties. However, payment via these providers is not always possible. This depends on whether the merchant and the buyer’s bank work together with the payment service.