PayPal vs credit cards: What's safer for online shopping?

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You can make fast, secure payments with both PayPal and a credit card – and many retailers let you use either one. So how do you decide between them? The best option is to just choose the one you prefer.

If you don't have a preference or aren't sure whether PayPal or a credit card is better for you, let's take a look at the features of each.

Is it better to use PayPal or a credit card?

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

Security feature	PayPal	Credit cards
Fraud monitoring	Yes.	Yes.
24/7 customer service	No. PayPal’s customer service hours are 8am to 8pm (AEST) Monday to Friday and 8am to 7pm Saturday and 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.
2-factor authentication	Yes. You can choose to have a one-time PIN sent to your mobile phone by turning on PayPal Security Key.	Yes. With Mastercard SecureCode, Visa Secure or American Express SafeKey, you can authorise the transaction with a PIN or other security step.
Reimbursement or chargeback	Yes. You can be reimbursed up to $20,000 if your purchases are not delivered or are significantly different to the seller’s description.	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 technology	Yes. PayPal offers encryption for all financial details stored in your account.	No. While credit cards offer encryption for in-store purchases, most rely on encryption used by online stores for payments over the internet.
Pre-set transaction limits	No.	Yes. Some cards allow you to set a customised limit for different types of transactions, such as those made online.
Return shipping costs	Yes. PayPal offers to refund the cost of return shipping for eligible purchases, up to $45 per return, 8 times per year.	No.

Should I use a credit card for online shopping?

Using a credit card is an incredibly popular payment method for a lot of Australians. In fact, there are more than 13 million credit cards in circulation in Australia. Just about any online store you visit will give you the option of paying by 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 expiry date
The card verification value (the CVV or CVC).

The CVV helps protect your account from fraud when you use the card for online purchases – or for other card-not-present transactions, such as those made over the phone.

Similar to in-store purchases, card acceptance may vary depending on whether you’re using an American Express, Mastercard or Visa credit card. Depending on the card and your provider, you could also get an added layer of security through text alert systems or services like Visa Secure, which adds another form of authorisation to payments before they are approved.

Pros and cons of using a credit card

Pros

24/7 fraud monitoring. Most Australian credit cards have security systems that detect and flag suspicious activity as it happens. Your card can be locked or cancelled if fraudulent activity is suspected.
Zero-liability policies. Also known as a fraud protection guarantee, this feature covers the cost of any fraudulent transactions made on your account.
Protect your actual money. Credit card providers will reimburse your money when things go wrong and protect your money if your account is compromised.
Fee-free options. Some cards offer 0% foreign transaction fees when you make purchases with an overseas business, potentially saving you 2-3% per online purchase.
Rewards. If you have a reward or frequent flyer credit card, you can earn points per $1 spent.

Cons

Online fraud risks. Most credit card fraud in Australia happens online. Data from the Australian Payments Network shows card-not-present (CNP) fraud made up 91% of all card fraud in the year to 30 June 2022.
Entering card details. You may have to type your card’s details each time you make a purchase, which could increase the risk of fraud if your internet connection isn’t secure or if you’re in a public place.
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 an online store is based overseas, you may be charged foreign transaction fees even if the purchase is shown in Australian dollars.

Tips for using your credit card to safely shop online

Should I use 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.

When you choose this option at the online checkout, you’ll need to log in to PayPal and choose the account you want to make a payment from. PayPal will then process the transaction through an encrypted network.

This set-up means you can store your credit card, debit card or even your bank account details in a PayPal account, and then choose which of these options you use when paying through PayPal. As a result, you don’t have to enter your payment details every time you make a purchase.

Pros and cons of using PayPal

Pros

Payment encryption. Every payment made through PayPal is encrypted so that your details are kept safe, reducing the risk of personal or payment information being stored in places 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. You can also set up PayPal One Touch, allowing you to make payments without entering your PayPal login details on an authorised device.
Refund options. PayPal offers reimbursement for return shipping costs (up to $45, 8 times per year) as well as for items that aren't delivered or items that differ from the retailer'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.

Cons

Fraud target. PayPal is a well-known online company and has previously been targeted by hackers. While it does regular security updates, there is still some risk involved in storing your card or account details anywhere online.
Currency conversion costs. If you shop with retailers that don’t accept foreign currencies, PayPal will use its own conversion rates for the transaction, which can be significantly higher than rates applied by most cards.
Confusing payment details. Transactions could show PayPal's billing details rather than the retailer's details. Check each transaction to be sure you made those payments.
Acceptance. Not all online stores accept PayPal, so using it will often depend on the business you’re shopping with.

Both credit cards and PayPal offer a number of security features and benefits when you’re shopping online – as well as potential costs and pitfalls. So, if you’re shopping with an online store that accepts credit cards and PayPal payments, choosing between them really comes down to which of the above features and services you prefer.

Compare credit cards with fraud protection guarantees

Every Visa, Mastercard and American Express card has a fraud protection guarantee. If we listed them all, you'd be looking at about 270 cards here. So we've taken our best credit cards and listed them here to help you narrow down your options.

1 - 22 of 22

Name	Purchase rate p.a.	Bonus points	Points per $ spent	Interest-free period	Balance transfer rate p.a.	Annual fee
St.George Vertigo Card	Purchase rate p.a. 13.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 28 months with 1% balance transfer fee, then 21.99%	Annual fee $55	Go to site More Info Compare	0% Balance Transfer Offer Get a 0% p.a. interest rate on balance transfers for 28 months (with a 1% balance transfer fee). Ends 31 July 2024.
Qantas Premier Platinum Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Bonus points 100,000	Points per $ spent 1	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 12 months with 2% balance transfer fee, then 21.99%	Annual fee $349 first year ($399 after)	Go to site More Info Compare	Up to 100,000 Bonus Points Earn up to 100,000 bonus Qantas Points. Plus, save with a reduced first-year annual fee and 0% p.a. for 12 months on balance transfers, with a 2% BT fee.
Kogan Money Card – Exclusive Offer Exclusive Kogan Rewards Program	Purchase rate p.a. 9.99% for 18 months, then 21.99%	Bonus points N/A	Points per $ spent 1	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 18 months with 2% balance transfer fee, then 22.74%	Annual fee $0	Go to site More Info Compare	0% Balance Transfer & 9.99% Purchase Rate Offers Save with 0% p.a. interest on balance transfers (with a 2% BT fee) and 9.99% p.a. on purchases, both for 18 months, plus, an ongoing $0 annual fee.
NAB Low Rate Credit Card	Purchase rate p.a. 13.49%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 28 months with 2% balance transfer fee, then 21.74%	Annual fee $0 first year ($59 after)	Go to site More Info Compare	0% Balance Transfer Offer Get a 0% p.a. interest rate on balance transfers for the first 28 months (with a 2% BT fee). Plus, save with a $0 first-year annual fee.
ANZ Rewards Black Credit Card Finder Award ANZ Rewards Program	Purchase rate p.a. 20.99%	Bonus points 180,000	Points per $ spent 2	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 21.99%	Annual fee $375	Go to site More Info Compare	180,000 Bonus Points & $150 back Get 180,000 bonus ANZ Reward Points (worth $800+ in digital gift cards) and $150 back when you spend $3,000 in the first 3 months.
ANZ Rewards Platinum - Velocity Points Velocity Frequent Flyer	Purchase rate p.a. 20.99%	Bonus points 100,000	Points per $ spent 1.5	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 21.99%	Annual fee $149	Go to site More Info Compare	Up to 100,000 Bonus Points Get up to 100,000 bonus Velocity Points: 70k points when you spend $2,000 in the first 3 months and 30k points after 15 months.
Westpac Low Rate Card	Purchase rate p.a. 13.74%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 28 months with 2% balance transfer fee, then 21.99%	Annual fee $59	Go to site More Info Compare	0% Balance Transfer Offer Save with a 0% p.a. interest rate on balance transfers for 28 months (with a 2% BT fee). Plus, a low 13.74% p.a. purchase interest rate. Ends 31 July 2024.
Qantas American Express Ultimate Card Qantas Frequent Flyer	Purchase rate p.a. 23.99%	Bonus points 90,000	Points per $ spent 1.25	Interest-free period Up to 44 days on purchases	Balance transfer rate p.a. N/A	Annual fee $450	Go to site More Info Compare	Up to 90,000 bonus Qantas Points Get a yearly $450 Travel Credit and up to 90,000 bonus Qantas Points (70,000 when you spend $3,000 in the first 3 months and 20,000 points in year 2).
ANZ Platinum Credit Card	Purchase rate p.a. 20.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 21.99%	Annual fee $0 first year ($87 after)	Go to site More Info Compare	$300 back & $0 First-Year Annual Fee Get $300 back on your card when you spend $1,500 on eligible purchases in the first 3 months and a $0 first-year annual fee. Plus, complimentary overseas travel insurance.
American Express Qantas Business Rewards Card Qantas Business Rewards	Purchase rate p.a. 0%	Bonus points 150,000	Points per $ spent 1.25	Interest-free period Up to 51 days on purchases	Balance transfer rate p.a. N/A	Annual fee $450	Go to site More Info Compare	150,000 Bonus Qantas Points and $200 credit (ABN holders w/ $75k revenue). Earn 150,000 bonus Qantas Points and a $200 credit when you spend $6,000 in the first 3 months.
ANZ Low Rate - Credit Back Offer	Purchase rate p.a. 13.74%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 21.99%	Annual fee $58	Go to site More Info Compare	$250 Credit back Get $250 back on your card when you spend $1,500 on eligible purchases in the first 3 months.
Westpac Altitude Platinum Card Westpac Altitude Rewards	Purchase rate p.a. 20.99%	Bonus points 120,000	Points per $ spent 1	Interest-free period Up to 45 days on purchases	Balance transfer rate p.a. N/A	Annual fee $49 first year ($175 after)	Go to site More Info Compare	120,000 Bonus Points & First-Year Annual Fee Discount Up to 120,000 bonus Altitude Points (90,000 points when you spend $3,000 in the first 90 days & 30,000 points after the first spend in year 2). Ends 31 July 2024.
ANZ Qantas Business Rewards Qantas Business Rewards	Purchase rate p.a. 20.24%	Bonus points 130,000	Points per $ spent 0.75	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. N/A	Annual fee $375	Go to site More Info Compare	130,000 Bonus Points ABN holders w/ $75k revenue. Get 130,000 bonus Qantas Points when you spend $6,000 on eligible purchases in the first 3 months. Plus, a fast-track to Qantas Business Rewards Level 2.
American Express Velocity Platinum Card Velocity Frequent Flyer	Purchase rate p.a. 23.99%	Bonus points 60,000	Points per $ spent 1.25	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. N/A	Annual fee $375	Go to site More Info Compare	60,000 Bonus Velocity Points Get 60,000 bonus Velocity Points when you spend $3,000 in the first 3 months. Plus a return domestic flight each year.
American Express Essential Rewards Credit Card Membership Rewards	Purchase rate p.a. 23.99%	Bonus points 80,000	Points per $ spent 1	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. N/A	Annual fee $108	Go to site More Info Compare	Offers up to 80,000 bonus Membership Rewards Points (20,000 points each month when you spend at least $1,000 on eligible purchases within the first 120 days).
Coles No Annual Fee Mastercard Flybuys	Purchase rate p.a. 0% for 6 months, then 20.74%	Bonus points N/A	Points per $ spent 0.5	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 20.74%	Annual fee $0	Go to site More Info Compare	0% Purchase Offer Save with an ongoing $0 annual fee and 0% interest on purchases for the first 6 months. Ends 31 July 2024.
Qantas American Express Discovery Card Qantas Frequent Flyer	Purchase rate p.a. 23.99%	Bonus points N/A	Points per $ spent 0.75	Interest-free period Up to 44 days on purchases	Balance transfer rate p.a. N/A	Annual fee $0	Go to site More Info Compare	$0 annual fee Earn uncapped Qantas Points for every $1 dollar spent, plus a $0 annual fee.
CommBank Ultimate Awards Credit Card CommBank Awards Program	Purchase rate p.a. 20.99%	Bonus points 100,000	Points per $ spent 1	Interest-free period Up to 44 days on purchases	Balance transfer rate p.a. N/A	Annual fee $420	More Info Compare	Receive 100,000 CommBank Awards points each month when you apply as a CommBank Yello customer and spend at least $3,500 within the first 4 months.
St.George Amplify Qantas Platinum Qantas Frequent Flyer	Purchase rate p.a. 20.99%	Bonus points 70,000	Points per $ spent 0.5	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. N/A	Annual fee $174 first year ($199 after)	More Info Compare	Up to 70,000 Bonus Points & First-Year Annual Fee Discount Earn up to 70,000 bonus Qantas Points when you meet the spend requirements and save with a first-year annual fee discount.
Bankwest Breeze Classic Mastercard	Purchase rate p.a. 0% for 12 months, then 12.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 12 months with 2% balance transfer fee, then 12.99%	Annual fee $49	Go to site More Info Compare	0% Interest Offers Save with 0% p.a. on purchases and balance transfers for 12 months (with a 2% BT fee).
Macquarie Black Card Macquarie Credit Card Rewards Program	Purchase rate p.a. 20.7%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. N/A	Annual fee $249	More Info Compare	0% Foreign Currency Conversion Fees Get 2 points per $1 spent and complimentary travel insurance. Plus, 0% foreign transaction fees.
Bankwest Breeze Platinum Mastercard	Purchase rate p.a. 0% for 12 months, then 12.99%	Bonus points N/A	Points per $ spent N/A	Interest-free period Up to 55 days on purchases	Balance transfer rate p.a. 0% for 12 months with 2% balance transfer fee, then 12.99%	Annual fee $69	Go to site More Info Compare	0% Interest Offers Get 0% p.a. interest on purchases and balance transfers for 12 months (with a 2% BT fee). Plus 0% foreign fees and complimentary overseas travel insurance.

Showing 22 of 22 results

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To make sure you get accurate and helpful information, this guide has been edited by David Gregory as part of our fact-checking process.

Written by

Amy Bradney-George

Editor

Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full bio

Amy's expertise

Amy has written 588 Finder guides across topics including:

Credit cards
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PayPal vs credit card payments

Compare the features and benefits of using PayPal or credit cards when you're making online purchases.

Is it better to use PayPal or a credit card?