Here are 6 of the safest ways to pay online and in-person

Any time you tap, swipe or dip a credit or debit card at checkout or enter your card number online, you expose yourself to all sorts of risks, from financial fraud to identity theft. A December 2022 Nilson Report study forecasted that payment card losses, including credit and debit cards, could top $165 billion in the U.S. over the next ten years.

Both digital and physical payment methods involve a degree of risk, but knowing how to navigate them could save you money and stress. Below, CNBC Select reviews the most secure payment methods as well as ones you might want to avoid to better protect yourself while shopping.

• Safest online payment methods
• Secure in-person payment methods
• Riskier payment methods

E-commerce sales in the U.S. are expected to exceed $1.1 trillion in 2023, according to Insider Intelligence, and the Federal Trade Commission (FTC) says that online shopping-related scams are the second-most reported type of scam. So, as online payments continue to trend upward, it's critical to protect your information.

Digital wallets

Digital wallets like Apple Pay, Google Pay and PayPal are growing in popularity. The 2023 FIS Global Payments Report by Worldpay from FIS found that digital wallets are now the leading e-commerce payment method in North America, accounting for 32% of all online transactions. And for good reason: Digital wallets offer many layers of security like encryption technology, passcodes, biometric security, and tokenization.

Tokenization offers improved security by essentially taking all the sensitive card information and replacing it with a one-time use "token" which is what is provided during the transaction. Even if someone intercepts your card's token, they will be unable to use it will have expired, and it contains no personal information rendering it useless to the perpetrator.

Credit cards

Credit cards are the next most popular online payment method, with the average American having four credit cards. Credit cards offer features like encryption and fraud protection to help keep your personal information secure. In addition, credit card users are protected by federal law and can only be liable for up to $50 on fraudulent chargers.

For example, the Citi Simplicity® Card, one of CNBC Select's top no annual fee credit cards for balance transfers, offers $0 liability on unauthorized charges and access to the ID Theft Protection program by Mastercard.

Many major credit card issuers now also let you request randomly generated virtual card numbers to further protect yourself when shopping online. For example, those with a Capital One card, such as the Capital One Venture Rewards Credit Card, can request a virtual credit card number through the browser extension Eno. The virtual card numbers are merchant-specific and you can lock, unlock or delete them at any time.

ACH payments

The Automated Clearing House (ACH) is a federally-regulated electronic network that facilitates money transfers from one bank to another. All U.S. banks can use ACH, and all you need to receive a transfer this way is a bank account and routing number. If you've ever received your paycheck via direct deposit, you've taken advantage of the ACH network.

ACH payments go through clearinghouses that enforce strict regulations, making it a secure payment method. ACH also typically offers lower fees because it's all digital and eliminates many of the processing fees associated with cards or checks.

The financial services industry has made strides in making in-person transactions more secure, so it's important to keep up with the latest security features.

Contactless payment options

Contactless payments, such as tap-to-pay credit cards and mobile wallets, allow you to make safe, touch-free in-person payments using near-field communication (NFC) technology. This method utilizes tokenization to ensure that each transaction has a unique one-time use code to prevent counterfeit fraud and ensures that no customer data is part of the transaction.

Most newly issued and renewed credit and debit cards now include contactless technology. For example, all newly-issued Wells Fargo consumer credit and debit cards, such as the Wells Fargo Active Cash® Card, and almost all Chase cards, such as the Chase Freedom Unlimited®, are contactless.

You can check to see if your card is contactless by looking for a wave-like symbol on the front of your card.

Chip-enabled credit cards

When contactless payments are not an option, consider using a chip-and-PIN credit card, also called an EMV-enabled credit card. Instead of swiping your credit card to make a payment, you dip your card into the payment terminal instead. Sometimes, you may even be prompted to enter a PIN to verify card ownership.

Credit cards that have a built-in EMV chip reduce fraud through tokenization. Chip cards generate unique codes for every transaction to better protect sensitive card data. Chip cards also also much harder to clone than magnetic stripe cards.

Many of the top rewards credit cards are equipped with EMV chip technology. For example, the Blue Cash Preferred® Card from American Express is a great pick for safe grocery shopping, offering 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%) and a built-in chip.

eChecks

Electronic checks, or eChecks, are very similar to ACH payments and even use the same ACH network, but there are slight differences. An eCheck is essentially a digital version of a check but is commonly used for one-time expenditures while ACH payments are often for reoccurring things such as rent payments. eChecks also can garner higher fees as there is more behind-the-scenes work required compared to ACH payments.

Electronic checks are inherently safer than physical checks as they cannot be lost or stolen, and any eCheck also gains the encryption provided by the ACH as well as the ability to reverse your payments under certain circumstances.

While no payment method is perfect, there are a few that are significantly riskier than others.

Cash

Some people prefer using cash over cards because they believe they may be conscious of their spending. However, using cash can be highly risky. Cash can be easily stolen or lost and difficult to trace. Cash also provides no warranties or purchase protection that some credit cards or other payment methods offer.

In addition to the risks, when using cash, you also miss opportunities to earn valuable credit card rewards and build your credit score.

Debit cards

Debit cards are a step above cash in terms of security, but are still a relatively risky payment method. Debit cards could leave you liable for funds lost to fraud, provide criminals direct access to your bank accounts, expose you to overdraft fees and risk tying up your money in hold charges.

While there are a few instances when paying with debit over credit is useful, it's not as secure as other payment methods and shouldn't be relied on regularly.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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For rates and fees of the Blue Cash Preferred® Card from American Express, click here.