Debit cards are a very flexible way of making payments. They’re convenient and widely accepted, but they do come with some risk. This has led to people worrying that they may also be a way in which cards can be misused.  There are a number of ways in which debit cards protected from being used in a fraudulent way.

Unlike credit cards, debit cards do not offer the same level of protection from fraud and unauthorised charges. This is mainly due to the fact that credit cards spend the banks money. They’re much more proactive about not losing their money.

Debit cards traditionally relied on a signature system when they are being used.  This would be when a cashier would check the signature on the receipt against the signature on the back of the card and ask for identity if there was any discrepancy.  However this way also had its issues. This being that people often do not feel confident to challenge a signature and that signatures can be practiced from the signature that appears on the back of the card.

The birth of chip and pin

Chip and pin technology was introduced in order to tighten up on the security of debit card transactions. This technology is more secure than the traditional magnetic stripe cards, which can be easily copied or hacked by criminals. Chip and PIN technology was first developed in France in 1984 and became the international standard in 1996. The latest Australian Payment Network report reveals that card fraud increased by 0.6% to $468 million in 2020.

Chip and PIN technology works by generating a unique code for each transaction you do. You then verify this transaction with you PIN to say you are who you say you are, and the transaction is approved.

Two Factor Authentication for online payments

The COVID-19 pandemic had a significant impact on the entire online shopping behaviour of Australians. Basically overnight, we were locked in our homes and scared of a killer virus that we switched to online overnight. In fact, according to the 2023 Inside Australian Online Shopping Report by Australia Post, Aussies spent $63.8 billion online in 2022. This beat the previous years number by 1.7%. The report also found that 9.4 million households in Australia made an online purchase in 2022, representing 82% of all households. During this time we saw a large uptick in scammers trying to fraud us too through SMS and phone scams.

But there are ways to protect yourself when shopping online. You can turn on two factor authentication(2FA) on your account. When there’s any kind of online transaction on your account, you’ll be sent a code by your bank that you enter online. Think of it like a virtual PIN.

Other ways to keep safe

Another way of protecting debit cards from fraud are online passwords through programs such as “Verified by VISA”.  These programs make an online purchaser go to another site, hosted by the bank that issued the debit card, and before the purchase can proceed they force the user to enter in a new password.

In recent years debit card issuers have become more concerned about online fraud and have tightened up on who can accept online payments online.

Constant replacement of debit cards has been another method that debit card issuers have used in order to protect a debit card user from fraud.  By constantly updating these cards it becomes harder for a card fraudster to use the same card as before as it runs out.

Zero liability guarantees are given by the card processors such as MasterCard and VISA for unauthorised transactions on a debit card.  This means that if there is a transaction that is unauthorised it will not be charged to the bank account attached to the debit card.

Tips to stay safe online

However, a debit card also has some disadvantages when it comes to online shopping. One of them is the lack of fraud protection compared to a credit card. You should be careful when using your debit card online. Make sure to follow these tips to protect yourself from fraud.

• – Check the security and legitimacy of the website before entering your card details
• – Use a secure payment service such as PayPal or Apple Pay
• – Keep your card details and PIN confidential and never sharing them with anyone
• – Review your bank statements regularly and reporting any suspicious transactions
• – Contact your bank immediately if you lose your card or suspect fraud

Debit card fraud protection

Online shopping has definitely become more popular as polarised by the COVID-19 pandemic. But it sure does provide some challenges for consumers and merchants alike. By following the tips we outlined above, you can reduce the risk of becoming a victim of debit card fraud and enjoy the convenience and benefits of using a debit card.