The Safety of Using Credit Cards
Credit card is small plastic payment card that is issued by banks, building society, and others financial institutions (Houghton 4). This type of payment card is not only a safer means of making payments, but also a convenient way of paying for things in shops at home, online, and around the world (Houghton 4). Unlike other means of payments such as cash or cheques, credit cards have several safety measures thereby making the card to be preferred or better means of payment. For instance, if something wrong happens when one is using a credit card, the users benefit from unique legal protection. Credit card users are further protected by the voluntary regulations that everyone with a credit card is supposed to follow. I is regarded as the lending code in credit card usage. The purpose of this paper focuses on the leading credit card code and other factors which make credit cards safe as a means of payment.
Credit Card Users are protected
Credit card users are protected if they do not get goods and services they paid for, or when by any chance the commodities purchased turn out to be faulty (Tripathy 218). For instance, in the United Kingdom (UK), section 75 (part of the Consumer Credit Act of 1974) protects users whenever they are using their credit card to buy commodities costing between £100 and £30, 000. According to Miller, credit card users in UK are legally entitled to get their money back if: what they bought turned out to be faulty; the company they bought the products from broke their contract with the credit card user (for instance, if the company closes down), and/or in a situation where the company does not deliver what was either promised or purchased by the customer (397). These responsibilities are jointly shared between the business where the consumer bought the commodities from and the credit card company. That is, although transaction irregularities might occur, the customers are ensured of full value of their money.
Moreover, credit card users are able to make successful claims if they had only used their credit card to pay for part of what they bought (Miller 397). The protection might cover any losses the card holder might have incurred over and above the original amount he/she paid. This implies that, credit card is a quicker and easier way to sort out any problem with the business the credit card holder bought either goods and services from. However, in case the consumer cannot fix the problem, the credit card company will be able to help. Compared to cash payment, even if the card gets lost, the owner can prevent an unauthorized person from using the card.
Credit Card Users are protected against Fraudsters
The other reason that makes credit card a better and safer means of payment is the fact that its users are protected against fraudsters. Through the use of credit card, fraud losses have decreased for over a decade. Levinson argues that even if credit card details are used by a fraudster, the card holders are protected (741). That is, regardless of where the card has been fraudulently used (shop, online, or abroad), credit card issuers protect victims in order to ensure that they do not lose out financially as a result of fraud. Levinson affirm the fact that whenever credit card holders suspect that they are fraud victims as a result of a certain purchase, they should contact their card issuers immediately so that the company can stop anyone else from using the card (741-742). As opposed to other common means of payments where it might not be safe to carry out transactions involving a lot of money, credit card is easy to carry, safe, and convenient for unlimited business transactions.
In countries such as the United States, as long as the card holder was not involved in the fraud and had not acted negligently, his/her card issuer would be compelled to refund him/her the full amount (Levinson 742-743). This includes refund of charges on their account or any interest that might have resulted from the fraud. Some people might need to know how credit card issuers determine whether or not the victim was involved in the fraud. If the credit card company suspects that the compliant is responsible for any disputed transaction, the card issuer will be contacted for probe. Levinson points that, the credit card companies might contact the fraud victim about any suspicious transaction even before the card holders are aware of the transaction (744-746). Fortunately, credit card companies do not just rely on the card owner or the police to notify them about the fraud, most of the companies have sophisticated detection system that enables them to spot any strange behavior on accounts. However, it is advisable to inform credit card companies in case the card holder plans to travel abroad. That will enable the company add or incorporate further safety measures on the card to prevent any form of fraud that might be fronted in the card. Based on these measures, it is evidenced that, credit card users are financially safe irrespective of where they might want to go and the amount of money they would like to transact.
However, credit card critics often argue otherwise as far as the safety of and argue that, although credit card holders might get their fraudulent charges reversed, merchants often end up losing the product cost, pay chargeback fees, or their merchant account closed. Such arguments are worth concern because internet shopping posse greater threat since merchants are not protected with physical verification advantages such as photo identification and signature check. Houghton feels that, although in most cases it might be impossible to perform any physical check that is required to identify the client, with the recent technological development; merchants will be able to check fraud. The following section outlines some of fraud prevention techniques that have been put in place.
Address Verification System
This fraud prevention technique comprises of Address Verification System (AVS) that matches the first street address digits and the ZIP code information provided for billing the purchase to the matching information that is on record with the card company (Vacca 90). The card issuer then returns to the merchant, a code representing the level of the match between addresses. However, AVS can only be used for suspected fraud which takes place within the country.
Card Verification Methods
The use of credit card is safe because merchants are able to verify whether the card presented for any transaction is actual or duplicate. The Card Verification Method (CVM) has 3 to 4 digit numeric code that is printed on the card but is neither embossed on the card nor available in the magnetic stripe (Radu 179). As opposed to cases where fraudsters can use fake cheques and notes, credit cards enables merchants to ensure that the individual presenting the card is in possession of the actual card. This is because a credit card cannot be copied from receipts or skimmed from magnetic strips (Radu 179; Miller 397). Some people might point that, although to some extent CVM prevents fraud, it does not protect merchants from transactions that are made using physically stolen credit card. In fact, this is an important observation. However, card holder can prevent such challenge by ensuring that, they report missing credit cards immediately in order to enable card issuers prevent further usage of the card.
In conclusion, credit card is the safest way of paying for either goods and services. This is because it offers one of the most sophisticated techniques that can be used to prevent the increasing financial fraudulence. As opposed to other means of payment such as cash and cheques, credit card is convenient. In case of fraud conducted via the cards, card owners are guaranteed the full compensation and refund where applicable. Some countries such as UK have put in place polices which protects credit card users against financial losses. Technological advancement has also devised security checks which prevents most risks associated with the use of credit cards. Overall, although credit cards might be subjected to fraud, adequate measures have been instituted on the use, protection, verification, and refund thereby making these form of payment cards a safest and safe means of payment. .
Houghton, Gillian. How Credit Cards Work. New York: PowerKids Press, 2009. Print.
Levinson, David. Encyclopedia of Crime and Punishment. Thousand Oaks, Calif: Sage Publications, 2002. Print.
Miller, Michael. Special Edition Using the Internet and Web. Indianapolis, Ind: Que, 2002. Print.
Radu, Cristian. Implementing Electronic Card Payment Systems. Boston, Mass. [u.a.: Artech House, 2003. Print.
Tripathy, Nalini P. Financial Services. , 2007. Print.
Vacca, John R. Identity Theft. Upper Saddle River, NJ: Prentice Hall PTR, 2003. Print.
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