Last editedMar 20233 min read
Over recent years, payment security has become a huge issue for private buyers and business purchasers. With that in mind, here is a quick guide to the most secure payment methods currently available.
There are two reasons why Direct Debit is massively more secure than similar alternatives such as standing orders and bank transfers. The first is that the popularity of Direct Debit has led to significant investment in it. Much of this investment has gone into making it more secure.
For example, in the past, setting up a Direct Debit mandate allowed the merchant to charge the payer until the mandate was actively cancelled. But now, it’s possible to set up single-use mandates. These are mandates that are automatically cancelled after a single payment is taken.
The second is that the Direct Debit Guarantee scheme gives payers a huge level of protection from both genuine mistakes and active fraud. So, even if a customer is incorrectly charged, they are guaranteed to be reimbursed quickly and easily.
How to collect payments with GoCardless
Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).
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Direct Debit through GoCardless
GoCardless offers payments using Direct Debits, a “pull-based” system. With this system, merchants choose the amount, charge date and charging frequency and, once the payer has authorised the debit, payments can proceed automatically.
Merchants can create these payments through the GoCardless dashboard or via GoCardless partners such as Xero, Quickbooks or Sage. If you use GoCardless with a partner, any payments you collect can be automatically reconciled. This saves you even more work.
In the UK and Germany, GoCardless also offers Instant Bank Payments, powered by Open Banking. With Instant Bank Payments, merchants send their customers a paylink to request payment.
As soon as the customer activates the paylink, the funds are confirmed. They can therefore be paid out to the merchant on the same or the next working day. This means that Instant Bank Payments are a great choice when you need immediate payment.
In the UK, payment cards are very secure thanks to chip-and-PIN in the real world and 3D Secure in the online world. Contactless payment is rather a grey area. On one hand, the lack of active cardholder verification clearly reduces security. On the other, card issuers do conduct other security checks to compensate for this.
The main drawback of accepting payment cards, both online and in the real world, is the cost involved. If you want to accept payment cards in the real world, you need specialised payment terminals. If you want to use them online, you need a payment services provider that can handle their security processes.
In addition to the set-up and running costs of accepting the cards, you will also need to pay fees to the card issuers. These are known as interchange fees. They vary depending on the card product. Fees for debit cards tend to be fairly affordable – but fees for credit cards, however, can be extremely high.
E-wallets are also known as digital wallets and payment apps. They allow users to transfer funds from other sources, store them and use them to make payments. They may also allow users to receive funds from other people and transfer them to their bank account.
In the UK, the Financial Conduct Authority keeps a Financial Services Register. This lists companies that have been authorised to provide payment services and/or services relating to account information. Any e-wallet listed on that can be assumed to be secure.
Keep in mind, however, that popular e-wallets are popular targets for spoofing. Spoofing is when cybercriminals impersonate a legitimate organisation. This reality has two implications.
Firstly, you need to be particularly rigorous about confirming that emails from e-wallets are genuine before you act on them. Secondly, you need to make a habit of checking your spam folder for genuine emails false-flagged by spam filters.
Even though the majority of people in the UK probably know what cryptocurrency is (at least in basic terms), it’s still not widely used as a payment method. The tricky situation is that merchants have limited incentive to take cryptocurrency because few people use it. And people have limited incentive to use it because few merchants accept it.
As cryptocurrency is so varied, it’s impossible to make a one-size-fits-all statement about its level of security. However, bitcoin is very secure and other forms of cryptocurrency also offer a high degree of security.