your net:// Credit-card nervousness - it's not unusual

By MICHAEL FOREMAN

There's something scary about making your first purchase online.

I'm no technophobe, but I had been connected to the internet for several years and had visited scores of sites offering all manner of tempting merchandise before I actually bought anything.

Finally, last year, I selected a Tom Jones CD from the virtual shopping cart at online music retailer CDStar.co.nz and typed in my address and credit card number. All I had to do was click the "submit" button, and another Christmas present would be taken care of.

However, as I suspect many people do, I wavered for a moment. Although I trusted the outlet, sending your credit card information out into the ether feels somehow wrong.

The CD turned up a day or two later, but the uncomfortable feeling that I had exposed myself to unknown electronic shenanigans didn't quite disappear until the credit card statement arrived.

Matthew Darby, chief executive of Christchurch-based Estar, owner of CDStar, says my fears were groundless - at least at his site.

"Using a secure system such as ours is safer than any ordinary shopping in a bricks and mortar outlet."

Mr Darby says the dangerous thing about using a credit card is giving too many people access to the number, as 80 per cent of credit card fraud is perpetrated by employees - for example, restaurant staff keeping a carbon copy of your credit card imprint. "With the internet they can't do that."

The card itself also offers some inherent protection. According to Consumers' Institute chief executive David Russell, the credit card is often an internet shopper's best friend, as the "chargeback" system offers a built-in guarantee.

"Credit cards give you the same protection over the internet as if you were buying by any other form. Each company has its own rules, but basically if you don't receive something or you are ripped off, provided you can establish your case, the credit card company will reverse the charges."

But credit-card companies will pay only if any losses are reported promptly.

Like most reputable online retailers, CDStar uses a secure server, which receives the card number in encrypted form. Only the bank, which is also connected to the server, can unscramble the credit number in order to verify its validity and check that there is sufficient credit to cover the transaction.

You can tell you are connected to a secure server by a window that pops up on your internet browser - and by a small padlock or key icon in the bottom status bar of your browser.

Research from the United States, where online commerce has taken off much faster than in New Zealand, appears to confirm that the main danger is rogue suppliers rather than credit card number theft.

A survey by research firm bizrate.com found that although 58 per cent of online buyers worried about having their credit card number stolen, only 2 per cent believed this had actually occurred.