Smart Online Shopping In Personal Finance

With life getting hectic day by day, we hardly get time to manage our finances. Many of us may also have been regularly missing our payment deadlines or making investments. But with a growing accessibility & portability of internet, people have started living online for their financial needs. As per industry sources, around 20mn people are using online as a medium for financial transactions including insurance, paying bills, buying or selling investment products, etc. If you aren’t amongst those leveraging online platforms, start now. After all, who would like to make extra efforts of going to a company outlet, when all financial products are available just a click away?

Though one can purchase financial products directly from the company websites, online aggregators are also gaining prominence amongst investors. Amongst others, the biggest advantage of using online platforms for personal products is ‘Comparability’. This means that online platforms will offer you quote for multiple products of insurance, loans, etc., so that the consumers will be able to compare them all on one platform and choose the one suits them best. This marks a healthy proposition for buyers as they can choose the most suitable and cost effective product. Also, online purchase of financial products is cheaper as by the end of transactions, most companies pass on 60-70 per cent of the transaction costs to consumers for making direct transaction.

However, you must exercise proper due diligence while indulging in online shopping of personal finance products. By this we mean that you must be extra careful beside the normal caution of not giving your confidential information to anyone, protection detection on delivery, hidden charges, etc. The following are the major points that one must cross-check while shopping for personal finance product online:

Verify information yourself: As said earlier, there are many sites giving you products’ information and comparison, but one wonders to the veracity of information available on different websites. It is possible that you might be charged at the rate of 5 per cent pre-closure charge on personal loan, even when the website is showing 4 per cent. So it’s imperative that you do your homework of checking out the authenticity of given information. You can follow the mentioned steps for verifying the information available:

In addition to this, you can also rely on the government as the fresh guidelines, issued by IRDA, for web aggregators dealing in insurance products are aiming to ensure transparency and uniformity of the information. It’s a considerate attempt to bring in uniformity in display of prices and key features of insurance products by aggregators, to protect the interests of investors and to rationalize the approach adopted by insurers in dealing with web aggregators. Following are the key features regulations proposed by IRDA:

The IRDA can dis-approve a web aggregator or take other punitive actions as deemed appropriate, in case online portal fails to comply with the issued guidelines.

Check if the information is biased

Many a time, aggregators give biased information and are keen to advertise products that earn them maximum commission. Take research support from independent analysis websites available. They will offer you pros and cons of the products with in-depth analysis. For example, portals such as ICICIdirect.com, fundsupermart.com, icicidirect.com, sharekhan.com, fundsindia.com amongst others have in-house mutual fund research publications. These portals provide you with several asset allocation models that can be used to construct your portfolio based on your age and risk appetite. You can always compare information provided by these independent sites from the one given by aggregators. However on the flipside, this support is available only for limiting products including mutual funds, stocks.

For other products, one can pip into independent experts/users products review available on aggregators’ websites. Generally, reviews given by customers are considered safe enough as they have prior experience of using a product. One can always draw inferences about product suitability to him/her based on the independent review rather than picking the one that your aggregator suggests.

Check if the website is trustable

Growing cyber-crime in India is a hard realty of today’s times and e-commerce websites are particularly at a high risk as they aggregate customer personal details. This call for a tight scrutiny of the site you intend to buy from, so as to establish its trustworthiness. You can look for the website security certificate (SSL) to verify that the site is legitimate and can encode files safely. One way to check SSL is to look at the site's URL address. Usually, secured sites have ‘https’ instead of ‘http’ in its address bar. You can also read the security information available to determine the safety protocol. Some web browsers also show whether a site is encrypted. Mozilla Firefox, for example, displays a closed padlock icon in its status bar at the right-hand bottom, indicating the site is secure.

In addition to this, customers must keep in mind that they should not provide any critical information such as credit/debit card numbers, net banking user name/password PIN, etc., to web aggregators as they are not authorized to collect such information.

Payment Gateway Security

A step imperative to protect your online security. Most of us would have been using either net banking or debit/credit card to pay our insurance premium, mutual fund payments, loan EMIs, etc. They have to be password protected through a Verified By Visa (VBV), MasterCard Secured Code (Credit/Debit Cards), Virtual Keyboard or Secured Access Image (Net-banking), etc. VBV and MasterCard Secured Code ensure that only you can use the cards. If they are stolen or otherwise, while Virtual Keyboard & Secured Access Image secure your log-in and hence avoid possible hacking.

While using mobile payments, you have to use an additional “One-Time Password (OTP)” for credit/debit cards via ‘Mobile’ or the ‘Interactive Voice Response (IVR) systems at the call center, as per RBI directive, with effect from 1^st Jan this year. This authentication is introduced to reduce the risk of frauds and secure your card information, while performing IVR/mobile-based payment transactions. This is similar to VBV or Master Card SecureCode.

Using Virtual Credit Cards

A virtual credit card, an ‘add-on’ issued by many banks, is a perfect online payment solution that offers complete security while shopping online. It’s a one-time use card and once created is valid for only 24-48 hours from the time of its creation, after which it expires. Also, you have the liberty to decide your spending limit by adding only that amount which you intend to spend online. Please note that they do not have a plastic existence and are created for pure online usage. All leading banks including HDFC Bank, ICICI Bank, Kotak Mahindra Bank etc. provide this facility.