When we stop broadcasting live, the Money Mastermind crew usually keeps on talking. One of the interesting items brought up after we finished getting schooled by Steve Stewart about how it’s possible to live without credit, we had a great discussion, off-air, about online payment methods that protect your information and keep you from the need to use credit.
Keep Your Personal Information Private
One of the reasons that many people use credit cards for online shopping is the safety issue. Who wants to put debit card information online and risk fraudsters getting direct access to your bank account?
However, you don’t need to use a credit card online to mask your personal information and protect your bank account. There are plenty of interesting options, including:
- Amazon Payments
- Google Checkout
You can connect these payment accounts to your bank account, and you don’t have to worry about giving out your information to every online portal out there. It’s also possible to send money to friends and family with person-to-person payment systems like Popmoney.
There’s no reason to rely on a credit card, even when you pay online, thanks to the third-party payment processors out there. As long as you trust these payment processors, you can keep your information safe while shopping online.
Bitcoin and Other Digital Currencies
Steve was especially interested in the concept of Bitcoin. The use of Bitcoin as a medium of exchange is especially interesting because it doesn’t have a “backing authority” in the way we are used to thinking of an authority.
Bitcoin is just circulated online, born of computing power. As such, it’s different even from local currencies, which at least allow you to actually see who you’re dealing with and ask for some accountability.
The advantage to a currency like Bitcoin, though, is that it allows you to trade directly with someone else — and without paying a hefty fee (in the form of foreign transaction fees or worrying about exchange rates). You agree on the price, and if you are paying, you send a Bitcoin (or, more likely, a portion of a Bitcoin) to the wallet address.
The main downside to Bitcoin, though, is that you are completely responsible for your wallet. It’s kept on the computer, and you need to back it up. If your computer crashes, you lose your wallet. There is no way to get that back.
Other cryptocurrencies promise similar ease of use, and the ability to exchange goods and services with anyone anywhere. Of course, it’s important to realize that some of these currencies may or may not have a future. We hear a lot about Bitcoin and similar currencies as investments, but they really only work if enough people adopt them and actually use them. With more retailers signing on — even on online — there does appear to be a chance for Bitcoin and the like.
The great thing about technology is the way it changes our financial options. You don’t have to rely just on credit or any other type of payment. There are many payment options these days, allowing for you to build diversity into your payment methods, much as you would build diversity into your investment portfolio.