Credit Cards vs. Cryptocurrency
What is the Safest Way to Pay for Goods?
Perhaps you already have got a few bitcoins or other cryptocurrency and you have faced the opportunity to spend them on goods or services. But is it safe? We mean, in the world where traditional credit card payments are common. We have compared these two types of payments in order to help you to make a well-argued decision.
Key Differences
It may seem strange, but if we discard the technical component, cryptocurrency payments can be compared with cash transactions or wire transfers between buyer and seller. Money destines directly from one party to another without going through intermediaries. Oppositely, a typical Visa transaction, for instance, involves four participants:
1. the merchant;
2. the acquirer (the financial institution that allows payments to the merchant);
3. the issuer (the card holder’s bank);
4. and the individual cardholder — the buyer.
This long chain may cause difficulties and security problems (we will talk about them later). On the other hand, cryptocurrency payments process through a private network of computers on blockchain, where each transaction is recorded. Blockchain, basing on peer-to-peer technology, allows sending assets secured by the cryptography without the involvement of a third party. This key difference is the basement for a set of reasons why cryptocurrency payments are safer than traditional payments with credit or debit cards.
The Initiator of the Payment
Firstly, cryptocurrency payments are always made by the allowance of the buyer. The merchant may show his address, but still, it is a buyer who initializes the payment and decides when and on what conditions to send his money. Probably you’ve faced the situation when a seller or a service provider, having your card details, has invoiced you and struck off the charge from your account without getting permission. This is how, for example, subscription services work. For customers, it may be pretty much complicated to detect and dispute such payments, because service providers spell out these terms in contracts. So, paying with cryptocurrency, you are insured against such unapproved spendings.
Safety of Funds
The next reason why cards payments are vulnerable for fraudulent activity is that the merchant gets access to the whole balance of your card while transaction. Lawbreakers use the army of methods to steal money from the account, among them, for example, card skimmers in points of sales. If the hacking attempt is successful, frauds will take possession of all the money from your account. Thus, 46% of Americans have become victim to credit card fraud from 2012 to 2016.
In the case of cryptocurrency payments, it takes much more efforts to steal funds: fraud has to hack into the consumer device or force him to send the currency.
Online Shopping
As for online shopping — credit card users are especially vulnerable to identity theft when buying goods on websites. Making payments you share the whole information about your card: the card number, the name on the card, the CVV number, and the expiration date. Despite online card payments are considered to be safe, online retailers are vulnerable to hacks that may lead to the massive theft of personal information and credit card data. When this happens, you have to shut down your credit card immediately unless you may lose all your money and even hit your credit score.
Making purchasing with cryptocurrency you don’t share your personal data. The payment process is very much alike to paying cash. You take your money and hand it to the cashier, merely it happens digitally — no personal or account information is transferred, just the currency from buyer to retailer.
In spite of all advantages and safety of cryptocurrency payments there are still some key insights you should pay attention to while using crypto. Thus, selecting a cryptocurrency wallet isn’t an easy choice, that’s why we wrote an article which can help you to make a right choice.
Ad Protection
Card companies track the information about your purchasing and then share it with advertisers. This is a serious privacy issue which forces out many users to use cash instead of cards. However, it is not an option for online shopping. So cryptocurrency may become a reasonable alternative in this case. Cryptocurrency is not associated with the user’s personal data and the history of their transactions.
Processing Fees
Receiving card payments for merchants is connected with the need to pay extra bank commission, that is why many of them set the minimum purchase amounts in an attempt to reduce transaction costs. Crypto payments fees are often much lower and more profitable for the seller, so it may result in the cancellation of minimum order conditions and shopping may become more convenient.
Worldwide Purchases
Shopping abroad may be attractive but still complicated due to the need for national currency conversion. Even now many merchants accepting cryptocurrency payments worldwide so you are able to easily send your money to the foreign seller not worrying about conversion rates, extra fees or government restrictions.
In Conclusion
To be fair, cards, all the same, have their own advantages and beneficial features. They offer the ability to borrow money, some kind of fraud protection (like the EMV chip), cashback and loyalty program. And still, cards are wider accepted among merchants both online and at points of sale. However, daily use of cards carries financial risks. From this perspective, using cryptocurrency while routine shopping may become an easy and safe choice.
If you haven’t got any coins yet you should read our tips before buying cryptocurrency in case not to make bad mistakes.
