TIPS TO PROTECT YOUR DIGITAL PAYMENTS AS DIGITAL PAYMENTS GROW IN POPULARITY, TRANSACTION PROTECTION IS MORE IMPORTANT THAN EVER.

The following information was released by the California Department of Financial Protection and Innovation (DFPI):

These days, almost everything can be paid for with digital payments using credit cards, debit cards, mobile apps, or digital wallets. According to a 2024 McKinsey and Company report, 92 percent of consumers in the United States (a new high) report having made some form of digital payment over the past year. Unfortunately, as digital payments grow in popularity, transaction protection is also a growing concern. A layered approach that combines security technology and careful account monitoring can provide strong protections for digital payments. Follow these tips to help protect your digital transactions.

Credit Cards v. Debit Cards

According to the Federal Deposit Insurance Corporation (FDIC), credit and debit cards both offer similar convenience but come with different advantages and drawbacks. Make sure you understand their distinct offerings and consumer protections before using them. Review your credit card and bank statements regularly to catch billing errors and unauthorized transactions as quickly as possible.

Credit Cards They typically offer more protections and benefits than debit cards. Because federal law provides safeguards against inaccurate and unauthorized charges, they have historically been the preferred digital payment method. Many credit cards have rewards programs or may offer extended warranty coverage on purchases and protection against theft or damage. Before choosing a credit card, make sure you understand what anti-fraud and purchase protection features it offers.

Debit Cards They offer the convenience of credit cards, but because payments come directly from existing funds in your bank account, they do not require a qualifying credit history. However, debit cards offer limited protection and may require theft be reported within 60 days. Federal law does provide protections when you transfer funds through electronic methods like point-of-sale terminals at retailers and automated teller machine (ATM) transactions. While you'll receive basic fraud coverage to protect against unauthorized charges, these cards rarely include additional benefits or insurance coverage.

Digital Wallets and Tokenization

According to American National Bank, using digital wallets might be safer than credit cards. When using a digital wallet or payment app, security starts with tokenization. This is a bit of computer code that replaces sensitive values, like credit card and social security numbers, with tokens that have no meaning without access to a secure decoder. Each time you buy something, it creates a one-time token that the merchant uses to receive payment. Even if a cyber thief hacks into a merchant's payment system, your accounts won't be compromised because the merchant doesn't have them. Using this type of payment system also keeps your debit and credit card numbers from being "out there" widely online.

Virtual Credit Cards

A virtual credit card is a digital representation of a physical credit card. As advised by Chase Bank, virtual card technology adds an extra layer of security by issuing a randomly generated temporary code for a one-time purchase. This payment method can be a safer choice than using your physical credit card, especially for online purchases. If the number gets stolen, it can't be used again. Some virtual credit cards may also offer the option to request a distinct security code assigned for each purchase.

Add a VPN

When making online purchases, a virtual private network (VPN) creates a secure tunnel for your payment data to travel the Internet, using private servers. According to the Federal Bureau of Investigations (FBI), a VPN makes it harder for an attacker to identify you. Even if attackers intercept your digital payment, the encryption stops them from understanding your transaction or using your data. You can add a VPN to a specific device (cell phone, iPad) or to your home Wi-Fi service. Several options are available from well-known providers, such as Search Shark and Norton. Make sure you read the entire end-user license agreement to identify which VPN provider may be the best fit for you.

Secure Your Devices

We cannot stress enough the importance of securing your digital devices, especially those used for digital payments. While no system provides absolute security, you should always add additional layers of protection when possible. Follow these tips to protect your online data:

Check your accounts Monitor your transactions carefully to make sure all purchases are legitimate. Correct any suspicious activity immediately. The sooner you act, the more likely you can reverse fraudulent charges or claim a refund.

Update your passwords Regularly update your passwords, PINs, and security questions. Make sure your operating systems are updated to the latest version. Always log out of accounts when you are finished using them don't just close the browser.

Use multifactor authentication We highly recommend using multifactor authentication, which requires authorizing access to your accounts using two or more separate devices or by using biometric traits such as fingerprints or facial recognition. This extra layer of protection is often what stops a cybercriminal from accessing your accounts or personal data.