Protecting Your Purchasing Power

We observed earlier that one way to protect passwords is to use a service that stores them for you, preventing the need for you to type the password each time you use a particular service. Services such as Passport store your password and private data remotely, on servers managed by the company that provides the service.

Protecting purchasing power in retirement;: A study of public employee retirement systems.




Assuming that the service stores and transports your password securely, you no longer need to depend on your own knowledge of security for storing and sending the password securely.This benefits you by ensuring that the service, not you, is responsible for storing and transferring your private data securely.

Passwords aren’t the only type of private information that can be protected in this fashion.You can also protect information you routinely use to make online purchases in the same fashion by using alternative payment services. In this section we examine several popular and trusted services: PayPal, CyberCash, American Express, and Microsoft Wallet.

PayPal and CyberCash
PayPal (www.paypal.com) and CyberCash (www.cybercash.com) are two electronic payment services that can help protect your financial information when you make purchases on the Internet.These services are payment systems that augment and build on the ways in which existing credit card or bank payment systems work.

When you create accounts with these services, you provide your private information, including checking account number or credit card number, only once.You don’t have to send in any payments or deposit any money with the service ahead of time, so there is no risk that you will lose deposited money—there isn’t any deposited money.

When you are ready to make an online purchase, you tell the vendor you will pay using PayPal or CyberCash by selecting this form of payment on the vendor Web site.The Web site must be set up to accept this form of payment. Once you commit to the purchase, the Web site requests PayPal or CyberCash to pay for the value of your purchase.The payment service, in turn, charges your credit card or deducts the purchase price from your checking account.Thus, you are saved from having to disclose your actual credit card number to the online vendor from which you are buying, reducing the chances that the number will be stolen during a break-in or accident.This transfers the risk of securing your credit card information from yourself and the online vendor to PayPal or CyberCash.

Electronic payment systems in general had a rocky start, due in part to some e-cash services such as Beenz and Flooz that went bankrupt. Beenz and Flooz, however, were entirely different creatures from PayPal and CyberCash.They were an entirely new form of electronic currency, not a payment system designed to transfer existing U.S. currency between buyers and sellers.With the extinct services, buyers would purchase units of e-currency called Beenz or Flooz using real currency and then use these units to make purchases at merchants who accepted the e-version. Paying with Beenz or Flooz was actually more like paying with a gift certificate than paying with cash or a credit card. Its value had to be prepaid, making these services less desirable than a payment system that used existing deposits of real currency.

American Express Private Payments
American Express offers a variant of the PayPal and CyberCash service using its own credit card authorization and payment systems. Instead of typing your American Express credit card number each time you want to make a purchase online, you instead type a Private Payment number that you obtain directly from the American Express Web site.

The Private Payment number is valid for only a few minutes, is encrypted, and is transferred to the merchant using a secure network transaction, making the risk of theft much lower than using a credit card number that could remain stored on the merchant’s Web server for a very long time.American Express then arranges for payment from your American Express account as identified using the Private Payment number.

This system works
something like a short-lived IOU.This service works only with Web sites that accept American Express, but any site that accepts American Express should be able to accept a Private Payment in lieu of an actual credit card number.To sign up for this service, visit www.americanexpress.com/privatepayments/info_page.jsp.s

Microsoft Wallet
Microsoft Wallet is a feature of the Microsoft .NET Passport.Web sites that accept transactions made via a .NET Passport Wallet obtain purchasing information from your Passport account rather than requiring you to type it in at the time you make a purchase.When you use this feature, you are transferring the risk of typing in credit card information to the Passport service, away from whatever security mechanisms you and your computer can provide, similar to using PayPal.To learn more about setting up a Microsoft Passport for use with this service, visit the Microsoft Web site at www.microsoft.com.

Anonymous Web Surfing
When you surf the Web, it seems like a fairly anonymous act. Until you actually type something that you recognize as identifying information about yourself, it might feel like you’re hiding behind the keyboard, emboldened to act in a way that you might not if the connection to you were more obvious.This is one of the hazards of Web surfing, because users are lulled into a level of confidence about their actions that they probably shouldn’t have.