Credit Card, PayPal or Cash App? How You Pay Matters
A guide to weighing security, convenience and benefits of each payment option
4 min
Buyers have more ways to pay for things than ever before: Apple Pay, Venmo, credit cards and dozens of other options. What you choose might matter as much as the purchase itself.
Each of the different payment methods provides various conveniences, perks and protections from fraud. Credit cards have long been the default option of choice. But higher interest rates have now raised the cost of carrying a credit-card balance.
Money-transfer apps such as Venmo and Zelle processed nearly $900 billion last year, and the Consumer Financial Protection Bureau expects that number to reach $1.6 trillion by 2027.
These apps and services provide easy instant payments, usually for free. The downside is that these options offer fewer protections from scams and unfulfilled orders.
“The U.S. consumer is very driven by convenience. They may not be directly driven by security,” said James Anderson, managing director at Paze, a bank-owned digital wallet.
Payment apps are among the fastest-growing sources of fraud reports and losses, according to Federal Trade Commission data. Overall fraud losses have increased more than fivefold to $1.2 trillion since 2019. Losses tied to payment apps jumped from $5 million to $47 million over the same period, according to the FTC data.
As new payment options gain acceptance, consumers should try to educate themselves how to use these methods safely, said Seth Ruden, director of global advisory at BioCatch, a fraud-detection software company.
“The channel itself is not the villain. The bad actors are the scammers, the social engineers and exploit artists,” he said.
Here’s how to weigh the security, convenience and benefits of each payment option:
Credit and debit cards
When you swipe or tap your card or authorise a card transaction online, the merchant’s bank communicates with your bank through a card network such as Mastercard or Visa to ask permission to withdraw a certain amount. Your bank then decides whether to approve the transaction based on your available funds or credit and the likelihood the transaction is fraudulent. If approved, your bank puts a hold on the funds until they are sent to the merchant’s account, usually within a business day.
Credit cards can be the most rewarding way to pay online. Card issuers use the revenue from transaction fees to fund perks for customers such as cash-back deals, travel points, access to airport lounges and fraud protection.
A credit card can be expensive if you don’t pay your balance in full, and higher interest rates have now raised the cost of carrying a credit-card balance. Paying off a $1,000 balance in 12 months at the current average annual percentage rate of 22.16% means $103 in interest, compared with $77 roughly a year ago when the average was 16.65%, according to estimates from the Federal Reserve.
Debit cards don’t offer the same rewards as credit cards since their issuers make less money from each transaction. They do come with similar fraud and payment protections as credit cards.
Federal regulations require issuers to reimburse customers for unauthorised transactions of more than $50 and allow customers to dispute charges within 30 days. Many credit cards also provide purchase protection, meaning you can ask for reimbursements directly from your issuer if something you buy is lost, damaged or inconsistent with what was advertised.
Few people make the most of their credit-card benefits, payments experts said. After finding most people don’t bother to read the fine print when they sign up for a new card, Mastercard is now notifying customers of benefits in real-time.
“If I have to read a big booklet or call a number to understand what my benefits are, I’m not doing it,” said Chiro Aikat, executive vice president of U.S. market development at Mastercard.
Digital wallets
Digital wallets such as PayPal or Apple Pay are among the safest and easiest ways to pay online. Checking out with a wallet is typically faster than paying with a credit card directly since one doesn’t have to re-enter billing information and shipping address.
All of the protections and benefits associated with the underlying card are still in effect for wallet transactions, so it is best to connect these wallets to a credit card directly to maximise your protection, said Corie Wagner, an analyst at Security.org, a safety-product review site.
If a digital wallet gives you the option to link a bank account directly, you should read the policy agreement to make sure you understand what is protected. For example, PayPal offers an extra level of purchase protection, but Apple Pay and Google Pay don’t.
Wallets also offer additional layers of security through encryption and biometric verification and many don’t share sensitive financial data such as your 16-card number with individual merchants. “Use as many authentication factors as possible” such as Face ID or personal identification numbers, Wagner said.
Peer-to-peer payment apps
Apps such as Venmo, Cash App and Zelle were designed to help people send money to friends and family, but they are now used in more settings. They move money more quickly than card payments because, instead of waiting on banks to approve the transaction, the payment is authorised once the sender hits submit. It is almost impossible to get money back once it has been sent.
These payment methods aren’t regulated as heavily as cards, so users might still be on the hook for unauthorised payments if a swindler gets control of their accounts.
“Use it to pay people you know, and trust,” said Meghan Fintland, a Zelle spokeswoman. “They’re not meant to have the credit-card security.”
Bank transfers
Businesses are increasingly offering ways to pay with your bank account directly since Automated Clearing House, or ACH, transfers are much cheaper to process than cards. This option should only be considered in exchange for a discount, payments executives said.
Consumers should be selective in sharing their bank information with merchants since wire transfers don’t have the same protection guarantees as cards.
If a business requests a direct bank transfer instead of a card payment, choosing a slower option over the newer instant methods such as Zelle might be best. ACH transfers typically take a few days to settle, giving you a few more days to try to stop the transaction before the money leaves your account.
“The slower it is, the greater likelihood is that you’ll be able to get recourse,” Ruden, at BioCatch, said.
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3 minFor decades, Australia has leaned into its reputation as the lucky country. But luck, as it turns out, is not an economic strategy.
What once looked like resilience now appears increasingly fragile. Beneath the surface of rising property values and steady headline growth, the Australian economy is showing signs of strain that can no longer be ignored.
Recent data paints a sobering picture. Australia has recorded one of the largest declines in real household disposable income per capita among advanced economies.
Wages have failed to keep pace with inflation, meaning many Australians are working harder for less. On a per capita basis, income growth has stalled and, at times, reversed.
And yet, on paper, things still look relatively solid. GDP is growing. Unemployment remains low. But that growth is increasingly being driven by population expansion rather than productivity.
More people are contributing to output, but not necessarily improving living standards.
That distinction matters.
For years, Australia’s economic success rested on a powerful combination: a once-in-a-generation mining boom, a credit-fuelled housing market, strong migration and a property sector that rarely faltered. Between 1991 and 2020, the country avoided recession entirely, building enormous wealth in the process.
But much of that wealth is tied to property. Around two-thirds of household wealth sits in real estate, inflated by leverage and sustained by demand. It has worked, until now.
The problem is the supply side of the economy has not kept up.
Housing supply is falling behind population growth. Rental vacancies are near record lows.
Construction firms are collapsing at an elevated rate. At the same time, massive infrastructure pipelines are competing with residential projects for labour and materials, pushing costs higher and delaying delivery.
The result is a system under pressure from all angles.
Despite near full employment, productivity growth has stagnated for years. In simple terms, Australians are putting in more hours without generating more output per hour. The economy is running faster, butgoing nowhere.
Meanwhile, government spending continues to expand. Public debt is approaching $1 trillion, with spending now accounting for a record share of GDP.
The gap between spending and revenue has been filled by borrowing for decades, adding further pressure to an already stretched system.
This is where the uncomfortable question emerges.
Has Australia become too reliant on a model driven by rising property values, expanding credit and population growth?
As asset prices rise, households feel wealthier and borrow more. Banks lend more. Governments collect more revenue. Migration fuels demand. The cycle reinforces itself.
But when productivity stalls and debt outpaces real income, the system begins to depend on constant expansion just to stay stable.
It is not a collapse scenario. But it is not particularly stable either.
Nowhere is this more evident than in housing.
The National Housing Accord targets 1.2 million new homes over five years, yet current completion rates are well below that pace. With approvals falling and construction costs rising, the gap between supply and demand is widening, not narrowing.
Housing is also one of the largest contributors to inflation, with costs rising sharply across rents, construction and utilities. Yet the private sector, from small investors to major developers, is struggling to make projects stack up in the current environment.
This brings the policy debate into sharper focus.
Tax settings such as negative gearing and capital gains concessions have undoubtedly boosted demand over the past two decades. But they have also supported supply. Removing them may ease prices briefly, but risks deepening the supply shortage over time.
That is the paradox.
Policies designed to make housing more affordable can, in practice, make the shortage worse if they discourage development. The optics may appeal, but the economics are far less forgiving.
It is also worth remembering that most property investors are not institutional players. The majority own just one investment property. They are, in many cases, ordinary Australians using real estate as their primary wealth-building tool.
Undermining that system without replacing it with a viable alternative risks unintended consequences, from reduced supply to higher rents and increased inflation.
So where does that leave Australia?
At a crossroads.
The country can continue to rely on population growth and rising asset prices to drive economic activity. Or it can shift towards a model built on productivity, innovation and sustainable growth.
The latter is harder. It requires structural reform, long-term thinking and political discipline.
But it is also the only path that leads to genuine, lasting prosperity.
The question is no longer whether Australia has been lucky.
It is whether it can evolve before that luck runs out.
Paul Miron is the Co-Founder & Fund Manager of Msquared Capital.
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