6

If I buy book from an online shopping site via my credit card, how can the retailer get money from my credit card? What is in place to ensure the retailer gets the exact amount of money I should pay, no less no more? Is it a risk to tell someone my credit card number for them to be able to charge me, like when we fill in a credit card number in Amazon.com?

Thanks in advance!

11

When you give your credit card number and authorize a merchant to charge your credit card, the merchant then gives the information to their merchant processor which in turns bills the bank that issued the card (it's a little more complex and it all happens instantly unless the merchant is using the very old fasion imprinting gizmos).

It is possible for a merchant to attempt to charge you more than you authorized but if they do they risk a fine ($25-$50 for a chargeback) from their processor, the legitimate portion of the charge as well as increasing the processing fees charged by their processor or even the possibility of loosing their merchant account entirely and being permanently blacklisted by Visa/Mastercard. In short no legitimate business is going to intentionally over charge your credit card.

There really isn't significant risk in using a reputable online retailer's order forms. There is the possibility that their database could be compromised but that risk is lower than the risk of having an employee steal your credit number when you give it to them in person. Besides in the US at least the most you can legally be held liable for is $50 assuming you notice the discrepancy within 60 days of statement the charge appears on and most banks limit liability to $0.

Over the years I have had a number of different credit card numbers stolen and used fraudulently and I have never had to pay any fraudulent charges.

  • Curious, how were your credit card numbers stolen? and how frequently do you use your credit cards? – triforcelink Jan 4 '11 at 21:40
  • 1
    @IntellSpire Anyone with a reasonably good camera can steal your card number and verification number (the only two things used for many online sites today, including Amazon.com which ignores expiration dates and zip codes for many purchases) any time you use the card in person. Given that, any OTHER way to steal your numbers is generally moot. – Sparr Jan 5 '11 at 0:17
  • Honestly I have no idea how my cards have been stolen, it's generally a 5 minute phone call to the credit card company so I don't even worry about how/why my card was stolen. Credit card companies in the US have made a calculated risk of using the current insecure magnetic strip instead of the more secure pin and chip used in Europe and as far as I am concerned it is their problem if my card is stolen (legally they are responsible for fraud). – stoj Jan 5 '11 at 10:50
  • 1
    One more thing to add I would be much more concerned about criminals getting a hold of the account and routing number to my bank account (the same information that is on a check) because it is much much harder to get money back even though the law is on your side at least in the US. – stoj Jan 5 '11 at 10:56
2

Your credit card limit is nothing more than a simple number. When you purchase something, the merchant receives a number (i.e. the amount of the transaction) from your card company (e.g. Visa) in their bank account, and that number is subtracted from your limit (added to your balance).

The amount is recorded, and isn't changed, so that's how they get the "exact" amount you paid. Transferring a number is easier than the retailer having to wait for cash to get from you to your card company to them. Moving numbers around is the basis of the modern financial system.

And yes, it is always a risk to let someone else have your credit card number. An untrustworthy company/person may use it to charge you without your permission, or if they have your full details they could use it as if they were you. With a reputable retailer like Amazon, the main risk is data theft: If a security hole is found in Amazon's system, someone could steal your credit card info and misuse it.

  • thanks. one can charge me by only knowing my credit card number? I never thought it's possible, i was presuming one need exchange record or something to be able to charge someone with credit card. – didxga Jan 4 '11 at 19:29
  • I think they do need more, sorry if I was unclear. The exchange record can be forged though if they have the info required for it. – Matthew Read Jan 4 '11 at 19:36
  • 2
    @didxga yes, they can charge you using just your CC number (and expiration date) - some companies do charge by phone, for example. However, for the charge to be successful they need Visa/MC/AmEx/etc to approve it - if they do it fraudulently and the cardholder complains, Visa will take back the money and then some and can either ban the fraudulent merchant or institute high fees and holdbacks. The presumption is that if there's no proof you bought it (like your signature, etc.) you can refuse it and the merchant will bear the cost. – StasM Jan 5 '11 at 16:06
  • @StasM Thanks, your answer is what i was expecting. – didxga Jan 9 '11 at 17:10

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.