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There are many ways to pay for goods you buy online. In this activity, we're going to provide an overview of the most common methods using credit cards, direct debit or direct deposit and PayPal.Start activity
How paying online works
When you go to the shopping website’s checkout, you’ll be asked to enter your delivery details and to choose a payment method. The three main payments methods accepted by most websites are:
- Credit card.
- Funds transfer from your bank account, also known as direct debit or direct deposit.
- A special service called PayPal.
Some websites may accept cheques and money orders, but these options are becoming less popular.
Paying by credit card
Credit cards are the most common way to pay online, with most websites able to accept credit cards.
Fraud protection with credit cards is quite strong. This makes it a very good way to pay online.
When you check out and select credit card as your payment option, you'll be asked to type your credit card number and some other details. Once you've done that, the site can charge your credit card, and you'll see the charge appear in your card statement.
Paying by funds transfer
You can transfer money directly from your bank account to a website. A direct deposit lets you transfer money from your bank to an account number given to you by the website.
A direct debit lets you use a system like BPAY to transfer funds to a website. The site will give you a BPAY reference number (which is like a bill number) and a biller code (which identifies the site). You can then transfer funds to the website using your bank's phone or internet payment system.
PayPal is a service especially designed for online purchases. Paypal acts as a 'middle man' for online payments and means that you never need to give your card details to a website.
When you buy something, PayPal actually makes the payment on your behalf. You then pay back PayPal using a credit card or your bank account. Paypal also offers buyer protection and will help you get your money back if there is a problem with the goods.
PayPal means you don't have to provide your credit card number to a shopping website. It can stay private. This is useful if you aren't sure you can trust a website or you buy goods from many different websites.
To use PayPal, you have to first create an account with PayPal. You can do that by going to https://www.paypal.com.
Well done! Now that you've completed the Payment options activity you know that there are lots of ways to pay for goods online.
The most common way to pay is by credit card, but you also might encounter other methods like direct deposit and PayPal.
A website might give you more than one option, however. So which is best? We'll cover that in the next activity Which payment option should I choose?