Ever wish you could keep your credit or debit card numbers (and the exact purchases you make with them) private while shopping online? It all seems kind of counter-intuitive. After all, how can you pay for something online without providing your payment information? Well, a new fin-tech startup may have figured out a way.
Privacy.com is aiming to letting cardholders choose which merchants they turn their payment information over to — a service many consumers may find valuable, given the slew of data breaches at big names retailers that have made headlines over the last few years.
“We believe privacy is a basic human right and it’s something that in the digital age is being eroded more and more,” Boling Jiang, Privacy.com’s chief executive, said, regarding the company’s mission statement. “There’s a tendency to overshare in our society when it’s sort of not always necessary.” He equated keying in sensitive payment information online to giving a bartender a driver’s license (which includes your address, driver’s license number and other personal information) just to prove you’re 21.
“That’s kind of a broken model,” Jiang said, given how many ways personal data can be used or monetized in today’s society. Similarly, “if you want to buy a T-shirt, you shouldn’t have to give everything else up with that,” he said.
How the Service Works
Privacy.com essentially lets you pay for items online by generating single-use card numbers that link to a verified financial account. The cards preclude you from having to turn over sensitive card information, including account numbers, expiration dates and CVV codes, to every merchant you wish to patronize. This information, should it fall into the wrong hands, could be used to perpetrate card fraud, which remains a problem worldwide.
“If you don’t share this information in the first place with the merchant, there’s no way for it to be stolen,” Jiang said.
Consumers get access to the service by opening up an account with the company, entering the minimum amount of personal information required by federal regulations (including name, email, address and date of birth) and connecting a funding source, like a checking account, debit card or credit card. Then, every time they shop online, a browser plug-in populates a merchant’s checkout page with the one-time, disposable card credentials.
There are options to configure these disposable cards for multi-use. For instance, you could set limits that prevent anyone from charging over a certain amount on a disposable card and then use it to make monthly payments on a streaming service subscription, Jiang said. While the cards are locked in terms of spending limitations, merchants can push money back onto them in the event that a customer needed a refund on goods or services. “They’re not dead numbers per se,” Jiang said, though you do have the option to “kill” a card completely. (In that instance, you would need to contact Privacy.com, who would manually process a refund.)
The company also keeps the exact nature of your transactions private since items purchased with the disposable card numbers appear on your financial statements simply as Privacy.com.
Some banks also give cardholders the option to create virtual card numbers to increase security while shopping online, so you may want to look into these options, too, if you are interested in increased online card security, (though Jiang said Privacy.com is aiming to improve on the user experience by making creating and managing disposable cards much easier.)
A Privacy Tradeoff?
Privacy.com is currently still in its test stages. A public launch is planned for later this year. The company will make most of its revenue off of swipe fees, so, initially its service will apply only to debit card purchases (made via a linked checking account) with disposable cards being issued through their bank partner (under the singular moniker The Privacy Visa card.)
You will ultimately be able to use it to mask your credit cards too. However, you’ll have to pay around a 3% fee to do so, since Privacy.com will have to pay a swipe fee to the credit card issuer. Privacy.com plans to waive this fee on certain purchases, though the specifics are still being worked out, Jiang said.
Customers who use Privacy.com may also have to sacrifice some rewards associated with their credit cards. Since your issuer won’t be able to see what exactly you bought online, you won’t earn any bonus points that may be tied to certain spend categories in your credit card’s rewards program. You would still get whatever base earnings were associated with the card, Jiang said.
Merchants also often collect data and monitor your purchases to send targeted offers or discounts to customers, so masking these details may prevent a few deals from coming your way. Of course, special offers and particularly lucrative reward programs can tempt some customers to overspend, so there could be a secondary bonus to not forking over your data, depending on your current debt levels and spending habits.
Safeguarding Payment and Personal Information
Given how data-driven our society has become, it can be very difficult to keep your credit cards and your identity, even, from falling into the wrong hands. There’s no fail-safe way to prevent becoming the victim of a data breach, but can mitigate the effects by monitoring financial accounts regularly and keeping an eye on your credit reports. (You can request your credit reports for free each year at AnnualCreditReport.com and see two of your credit scores for free each month on Credit.com.) Unfamiliar line items, like strange addresses or new loan accounts you didn’t open, are a sign of identity theft.
More on Identity Theft:
- Identity Theft: What You Need to Know
- How Can You Tell If Your Identity Has Been Stolen?
- What Should I Do If I’m a Victim of Identity Theft?