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PayPal vs. credit cards: Which is safer?

Both payment methods let you get a refund if needed.

Online fraud, along with concerns that purchases won’t show up, has made many people think twice about how to pay for online shopping. Both PayPal and credit cards offer features and services that help protect you, including fraud-monitoring systems and ways to get your money back if a purchase isn’t delivered as promised.

Since there are some differences between using PayPal or a credit card, choosing between them comes down to your own preferences. So, let’s take a look at how each option works so you can decide which one is better for you.

PayPal vs. credit card security features

Here’s a quick guide to the different types of protection you’ll get when you use PayPal or a credit card. We’ve focused on the key options most cards offer as features can vary depending on what you’re using.

Security featurePayPalCredit cards
Fraud monitoringYes.Yes.
24/7 customer serviceYes. PayPal’s customer service hours are 6:00 a.m. PT to 6:00 p.m. PT Monday through Sunday.Yes. American Express, Mastercard and Visa credit cards all offer 24/7 emergency hotlines for lost or stolen cards as well as for suspected fraud.
Two-factor authenticationYes. You can choose to have a one-time PIN sent to your mobile phone by turning on PayPal Security Key in your account’s security settings.Yes. If you have a card that offers Mastercard SecureCode, Verified by Visa and American Express SafeKey and shop with participating brands, you’ll be prompted to authorize the transaction with a PIN or other security step.
Reimbursement or chargebackYes. If an item doesn’t get delivered or if it arrives and is significantly different from the seller’s description, PayPal offers reimbursement for the cost of the item and shipping.Yes. If your purchases are not delivered or are not as they were described, you may be able to reverse the transaction by requesting a chargeback.
Encryption technologyYes. PayPal offers encryption for all the financial details you have stored in your account.No. While credit cards offer encryption for purchases you make in-store, most of them rely on the encryption used by online stores when you make payments over the Internet.
Return shipping costsYes. PayPal offers to refund you the cost of return shipping for eligible purchases, reimbursing you up to $30 per return.No. This is not a standard feature of credit cards

Which option is more secure?

Both credit cards and PayPal offer a number of security features and benefits when you’re shopping online. That said, they come with potential costs and pitfalls as well. PayPal offers slightly better encryption, which on some websites could help you protect your money.

woman's hand with red nails holding a white credit card on top of a laptop

Using a credit card for online shopping

Just about any online store will give you the option to pay with a card. With this method, you’ll need to provide the following details:

  • Your name, usually as it appears on the card
  • The card number
  • The expiration date
  • The Card Verification Value, known as the CVV or CVC

Similar to in-store purchases, card acceptance may vary depending on whether you’re using an American Express, Mastercard or Visa credit card.

Pros and cons of shopping online with a credit card


  • 24/7 fraud monitoring. Most credit cards have security systems that detect and flag suspicious activity as it happens. Depending on the card, you will also have the ability to lock or freeze your card if you suspect it’s been used for fraud.
  • Zero-liability policies. This feature covers the cost of any fraudulent transactions made on your account so you’re not left out of pocket if your card is compromised.
  • Protect your actual money. If your purchases don’t show up or are different from the item descriptions, your credit card provider may be able to help you get your money back.
  • Fee-free options. Some cards offer 0% foreign transaction fees when you make purchases with a business based overseas, potentially saving you 1% to 3% per online purchase.
  • Rewards. If you have a reward or an airline credit card, you’ll be able to earn points per $1 spent for your purchases.


  • Online fraud risks. Online credit card fraud has been steadily increasing as more people use cards to make purchases via the web.
  • Entering card details. You may have to type your card’s details each time you make a purchase. As well as being annoying, this could increase the risk of fraud if your Internet connection isn’t secure or if you’re in a public place. As a general rule, never enter your credit card details on a website that starts with http://. It has to be https://.
  • Potential interest charges. If you carry a balance from your online shopping, you’ll be charged interest at the card’s purchase rate.
  • Unexpected fees. If you’re using a card that does charge foreign transaction fees, it may not always be clear when this fee will be charged. For example, if an online store is based overseas, this fee may apply even if the purchase is shown in US dollars.

Using PayPal for online shopping

Unlike a credit card, PayPal lets you store your chosen payment details in a secure account. You can then make payments through PayPal when you shop with a store that accepts it.


  • Payment encryption. Every payment made through PayPal is encrypted so that your details are kept safe. This reduces the risk of personal or payment information being stored in places where you don’t want it.
  • Fast payments. You don’t need to enter your card or account details when you make a payment through PayPal. Instead, you’ll just be prompted to log in to your account and select your preferred payment option.
  • Refund options. If you need to return a purchase made through PayPal, you could get reimbursed for the cost of return shipping, up to $30 per transaction. PayPal also offers reimbursement for items that are not delivered or are very different from the seller’s description.
  • Credit card rewards. If you add a rewards credit card to your PayPal account, you’ll be able to earn points per $1 spent on eligible purchases. What’s more, most major credit cards are accepted.


  • Currency conversion costs. If you shop with retailers that don’t accept foreign currencies, PayPal will use its own conversion rates for the transaction. This often comes with additional fees. PayPal will show you the conversion rate at the time of the transaction.
  • Confusing payment details. A transaction that’s processed by PayPal could show its billing details, instead of the details of the company you made your purchase with. If you’re not aware of this, you could mistake the payment for fraud when checking your credit card or bank account transaction history.
  • Acceptance. Not all online stores accept PayPal, so using it will often depend on the business you’re shopping with.

Bottom line

If you often shop online, choosing to pay with your credit card or PayPal won’t make much difference security-wise. PayPal does have better encryption when shopping at some websites, but not all retailers accept it as a payment method.

Compare credit cards to make the most of your online shopping.

Images: Shutterstock

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