For many individuals, paying bills now involves no check book, stamps, or post office. More and more people are paying bills online through the internet. But how safe are electronic payments? The answer depends on several factors.
The benefits of electronic payments are numerous. You can pay your bills online, twenty-four hours a day. You can automate payments for regular bills like utilities and car payments so you don’t risk forgetting and making a late payment, or, to keep things directly under your control, you can opt to receive reminders when bills are due, and these will prompt you to go set up the required payment.
You can sign up for e-bills from many providers so your statement will be sent electronically to your bank. Electronic billing and payments save money and time. Some providers offer discounts for customers who sign up for electronic statements. Your check won’t get lost in the mail, won’t be misapplied by the payee, and can’t be stolen from a mailbox and fraudulently altered. Electronic payments can be made in as little as one day, compared to the week it takes to receive and process a check. You’ll save money on stamps and checks. Most banks offer the ability to download transactions into popular money management software like Quicken.
While no internet activity can be considered risk free, banks employ the industry best practices to maintain firewalls, data encryption, and other security measures to keep your information safe. The government’s Regulation E provides that if you notify the bank within two business days of any fraudulent activity, your liability is limited to $50. This does require that you monitor the activity in your bank account on a regular basis. However, some banks also provide email alerts that allow you to decide if you want an email notification of any transaction on your account above a dollar amount you set.
Banks use multi-layered security for account access. For example, you may be asked to identify a picture (site key) you have previously chosen before you enter your password, or you might be asked for a pin number in addition to your regular login and password. If you login from a computer that the bank does not recognize, you may be asked to provide answers to security questions that you set up when you established the online access, such as, “Where did you attend elementary school?” or “In what city did you meet your spouse?”
You can assist the bank to provide the best level of security by choosing strong passwords and safeguarding access to your login and password data. Don’t use the same password for all your accounts and don’t choose obvious, simple passwords. Most banks now require passwords with both upper and lower case letters and numbers with a minimum number of characters.
While banks are trying to provide the safest environment possible for your financial transactions, you are the other end of the connection. Be a smart internet user. Take advantage of anti-phishing, anti-spyware, and anti-virus software and keep it up to date. Be wary of emails asking for personal information, even if they appear to be from a reputable bank. If you have even the slightest doubt, pick up the phone and call.
Choose your bank wisely. If the bank doesn’t require sufficient information before it allows you access, maybe that’s not the institution you want handling your money.
Electronic transactions allow incredible flexibility and ease of use. If you choose your bank carefully and keep your computer security up to date, you can enjoy all these benefits and still feel comfortable that your money and your personal information are secure.