Is It Safe To Use Debit Card Online?

Shopping online has become a large part of our daily lives. You're cozied up on the couch, scrolling through endless clothing, gadgets, subscriptions, and other goodies.

With e-commerce booming in Canada and attracting over 29 million customers, the digital marketplace is yours to explore.

A debit card is your reliable ally for unlocking these treasures. Think of it as your wallet's digital sidekick, seamlessly connected to your bank account online for easy access to funds wherever you go.

Yet, amidst the excitement of scoring deals and filling your cart, one question lingers at the back of your mind: is it safe? Here's our guide to understanding the versatile debit card and securely shopping online to avoid scams and identity theft.

Using your debit card for online transactions

Online purchases can feel like a digital adventure, and your debit card is your passport. But how does it work, exactly?

A debit card directly links to your chequing account, allowing you to access funds for in-store and online purchases. When you make a transaction, the card issuer immediately deducts funds from your account balance. This provides a seamless and straightforward way to manage your finances.

Using your debit card for online purchases and recurring payments is a breeze. Simply enter your card details, including the card number, expiration date, and security code (usually found on the back of the card), during the checkout process. This information is encrypted and transmitted securely to complete the transaction.

You can't use debit cards to build credit, and they are not protected by the Fair Credit Billing Act. Instead, consumer safety is outlined in the Canadian Code of Practice for Consumer Debit Card Services. With a debit card, you can access your own money without the risk of accumulating debt.

Additionally, you can use your debit card to plan for spending and saving, helping you stay on track with your financial goals.

What is a prepaid debit card?

A prepaid card is a convenient alternative to traditional debit cards, allowing you to load funds onto the card in advance and use them for purchases and transactions. You have control over your spending and avoid overdraft fees or debt accumulation.

Prepaid cards give you the power of a card without the hassle of going to a financial institution.

KOHO is among the most popular choices, where you can earn interest on your savings and get instant cashback. You will receive an interest-free, reloadable prepaid Mastercard with the same spending power as a credit card.

Your money is safe with KOHO. Funds are protected by industry-leading security systems, and the app offers additional options like avirtual credit card and the ability to lock your card at any time for added peace of mind.

Are debit cards safe to use online?

Using a debit card online is undeniably convenient when you need access to your funds for everyday purchases and transactions. But you may wonder about their safety and security.

Rest assured, using a debit card online is generally safe, thanks to various security measures implemented by every financial institution. Here's why:

Fraud protection

Most debit cards have built-in fraud protection measures to safeguard your account against unauthorized transactions.

These measures may include monitoring your chequing account for suspicious activity, notifying you of any unusual transactions, and offering zero-liability protection, which means you won't be held responsible for fraudulent charges.

EMV chip technology

Many debit cards now feature EMV chip technology, an added layer of security against counterfeit card fraud. The chip creates a unique code for each transaction, making it more difficult for fraudsters to clone your card or steal your account information.

PIN verification

When making purchases or withdrawing cash, you often enter a personal identification number (PIN) to authenticate the transaction. This PIN verification adds another level of security, ensuring that only you can access funds with your card.

Secure online transactions

For online purchases, debit cards use encryption technology to protect your card information during transmission. Additionally, a financial institution may offer additional security features for online transactions, such as one-time passwords or verification codes sent to your mobile device.

Immediate account monitoring

With online banking and mobile apps, you can instantly check your bank account balance and monitor your account activity in real time. This allows you to quickly detect and report any unauthorized transactions. Immediately reporting suspicious activity can help mitigate potential losses and further protect your account.

While no payment method is entirely risk-free, debit cards are generally safe to use, thanks to their robust security features and fraud protection measures.

Paying using a debit card vs credit card online

When it comes to making online payments, both credit and debit cards offer convenience and security, but they come with different features and considerations.

Paying with a debit card

As a debit cardholder, you use money directly from your bank account. Transactions are immediately deducted from your chequing account balance.

It's great to use a debit card for budget management because it limits your spending to the funds available in your bank account. This can help you avoid accumulating debt since you're not borrowing money.

While most debit cards offer some level of fraud protection, it may not be as extensive as what's offered with credit cards. You may be liable for unauthorized transactions if you don't report them promptly.

Paying with a credit card

Credit cards allow you to borrow money from the card issuer up to a certain credit limit. You're essentially using the issuer's money for purchases, which you'll need to repay later.

Responsible credit card use can help you build a positive credit history. Timely payments and low credit utilization can improve your credit score over time. These cards also come with rewards programs, cashback offers, and other perks. These rewards can add value to your purchases and offset annual fees.

The biggest benefit is the higher level of fraud protection to avoid credit card fraud. It is easy to notify your credit card company if your card is used for fraudulent transactions to avoid being charged.

Ultimately, the choice between using a debit or credit card online depends on your individual preferences, financial habits, and goals. Use a debit card for budgeting, everyday purchases, and avoiding debt, especially if you have a limited credit history.

Consider applying for a credit card to earn rewards, build credit, and enjoy consumer protections, especially for large purchases or transactions where added security is needed.

If my debit card was hacked, what do I do?

Being alerted of fraudulent debit card transactions is scary, but it's important to take immediate action to mitigate any potential damage and protect your finances. Here are the steps to take if you suspect your debit card has been compromised:

1. Contact your bank

The first step is to contact your bank or credit union as soon as possible to report the unauthorized activity on your debit card. Most banks have dedicated fraud departments to handle such incidents and can assist you in securing your account and investigating the breach.

2. Freeze or cancel your card

Depending on the severity of the situation, you may need to freeze or cancel your debit card to prevent further unauthorized transactions. Your bank can help you with this process and issue you a new card with a new card number and security code.

3. Review your account activity

Carefully review your account activity to identify any fraudulent or suspicious activity. Take note of each transaction's date, time, and amount and report them to your bank when you file your fraud report.

4. Change your password

If your debit card was hacked due to a data breach or compromised account, it's essential to change your online banking passwords and PINs right away. Choose strong, unique passwords for each account and consider enabling two-factor authentication for added security.

5. Monitor your accounts

Keep a close eye on your accounts at multiple banks, including chequing accounts, savings accounts, and credit cards, for any signs of unauthorized activity. Set up account alerts or notifications to receive real-time updates on account activity and take prompt action if you detect any suspicious transactions.

6. Report the incident

In addition to reporting the unauthorized activity to your financial institution immediately, consider filing a report with the appropriate authorities, such as the police or the Canadian Anti-Fraud Centre (CAFC). Reporting the incident can help authorities track the perpetrators and prevent future fraud.

With swift and decisive action, you can minimize the impact of a debit card hack and safeguard your finances against future incidents.

Best ways to protect your online debit card transactions

If someone gets hold of your debit card number online, they can drain your bank account. Fortunately, there are multiple ways to ensure debit card protection:

Choose secure websites

When making online purchases, only shop on secure websites with a valid SSL certificate. Look for https:// at the beginning of the website URL and a padlock icon in the address bar, indicating that the site is encrypted and secure.

Keep your device secure

Ensure your computer, smartphone, or tablet is protected with up-to-date antivirus and antimalware software. Keep your operating system, browser, and apps updated with the latest security patches to prevent vulnerabilities.

Enable two-factor authentication

Wherever possible, enable two-factor authentication (2FA) for an extra layer of security. 2FA requires you to provide a second form of verification, such as a code sent to your mobile device, in addition to your password, when logging in or making a transaction.

Monitor your account activity

Regularly monitor your bank account and debit card transactions for any unauthorized activity. Set up account alerts or notifications to receive real-time updates on account activity, and be vigilant in reviewing your statements for any suspicious charges.

Be wary of phishing attempts

You should be cautious when clicking on links or downloading attachments in unsolicited emails or messages, as they may be phishing attempts designed to steal your personal information. Avoid providing sensitive information like your debit card number or PIN unless you're certain of the recipient's legitimacy.

Stay vigilant, stay informed, and prioritize your online security to enjoy worry-free online shopping experiences.

In Conclusion

While using a debit card online offers convenience and accessibility, as with any other transaction, it is important to follow best practices in order to ensure its safety.

For added flexibility, consider pairing your debit card with the easiest credit card to get in Canada. This gives you a two-fer, allowing you to handle online transactions with ease while establishing a positive credit history for future financial endeavours.

Remember, being informed is key to protecting your financial well-being online. Stay secure, stay aware, and embrace the ease of online transactions responsibly.