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E-commerce and Security

November 7, 2007

E-commerce transactions are actually more secure than in-person credit card transactions. 

From a liability standpoint this is reinforced even further, as card holders have greater protection from online orders than retail orders. 

This is true becuase:

 1)  When an e-commerce transaction is processed, an incredible amount of effort is put into securing the data.  The data is encrypted using 128 bit or 256 bit SSL encryption, which is nearly unbreakable through a brute force attack and would require a resource of supercomputing power far outside what is generally available anywhere outside of military applications.  To put this in better perspective, if a SSL encrypted session were to be hacked, the thousands upon thousands of hours of supercomputing time it would take to breach that session would cost exponentially more than the cardholders credit limit is likely to be. 

Compare this with the security involved when you give a waiter your credit card at a restaurant.  He walks away with your card.  He doesn’t need supercomputers to jot your number down on a piece of paper.  Credit card data is handled far more securely online than in the typical retail scenario.

2)  When you do a card-not-present transaction, the card issuers first responsibility is to the cardholder and not the merchant.  To put this in a less technical way - when you buy something online, if a dispute arises, you are FAR more likely to win the dispute in a card-not-present transaction than you would in a traditional retail (in person with signature) transaction.  In the absence of a signature you are well protected when using your credit card - far better protected than you are when using the card and signing in person.

I think these are the 2 main reasons why e-commerce transactions are more secure than traditional retail transactions.  I would encourage any comments or discussion on the subject.  In reality, e-commerce is no longer new and there is no longer a novelty involved (for most users) when buying online.  It is the convenience and cost-cost effectiveness, rolled into one which will continue to drive the growth of e-commerce.  So if you have customers who are concerned about purchasing something online, I encourage you to explain the two points above to help educate them on the subject.



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