Most of us shop online, whether we’re buying clothes, ordering groceries, or grabbing concert tickets. But what should you use to pay for the purchases you make online? You likely reach for your credit card because,historically, they were the only option.

But, did you know that you can use some debit cards in the same way?

A co-badged debit card is one you can use for online purchases. A co-badged debit card has two logos on the front —an Interac® logo as well as another payment brand, such as the Visa* logo for the Visa Debit* card. This card lets you make online purchases in addition to traditional debit purchases.

So, what’s the difference between making an online purchase with a co-badged debit card, like Visa Debit, and your credit card? 

Let’s dig into the pros and cons of the two.

How to pay for online purchases using a co-badged debit card

Like any traditional debit transaction, when you make a payment online with your co-badged debit card, the payment comes directly from your bank account — just like it would in store. The difference? You don’t swipe, tap or enter a pin to confirm the purchase.

To make an online debit card payment, you’ll enter the 16-digit number, similar to a credit card. From there, you’ll verify the account details by providing the expiry date listed on the front of the debit card and the three-digit Customer Verification Value (CVV) or Card Verification Code (CVC)* number on the back of the card for security verification. Most online merchants will also require you to share the mailing address and postal code associated with your bank account. 

For online payments you make using a co-badged debit card, the transaction is processed and the amount will be taken from your account right away. If the transaction is for a pre-authorization, for a hotel or car rental, then the funds will be held and you will not have access to them until the transaction is completed. These funds may be held for a varying amount of time depending on the business. The largest difference from a credit card is that it is your actual money being held rather than available credit on a credit card. 

Your Visa Debit card is accepted at any merchant that accepts Interac or Visa Debit (in Canada) and Visa (outside Canada).

Why choose to pay with a co-badged debit card for online purchases?

Paying with a debit card makes sense for those who do not have access to credit, or who feel more comfortable paying for their goods or services upfront.

Debit cards help you manage your money because you only spend what’s already within your account balance. 

For people who are unable to access credit cards, a co-badged debit card is an excellent alternative to buy subscription services, like Netflix or Spotify.

For some merchants or services, using a debit card may help you to avoid paying additional fees that they may charge for using a credit card (for example, certain utilities). 

Why you might not choose to pay online with a co-badged debit card

Although debit cards are essential to managing money, they also don’t offer the same flexibility that a credit card might.

As we mentioned above, if the payment is for a pre-authorization, like a hotel room or car rental, you will not have access to those funds in your account until that transaction is complete. With a debit card, if your account does not have sufficient funds to accommodate the pre-authorization, you could risk dipping into overdraft.

Also, debit cards may not have the same reward structure that most credit cards offer. Your credit card might have travel rewards, points rewards, event ticket protection or cash-back advantages that aren’t typically available on a debit card.

When’s the right time to use a credit card online? 

Unlike debit cards, credit cards give you more flexibility for repayments (you can choose to pay your credit card bill multiple times a month) and options for rewards. 

Like we mentioned before, credit cards have perks. You can collect travel rewards, use cash-back options and get built-in insurances to protect your purchases, depending on which card you have.

Paying with a credit brings with it some considerations. They provide the ability to pay up front, but just like with a debit card, we recommend budgeting as you spend. 

There are pros and cons to both credit and debit cards, depending on your situation and what you’re purchasing. It’s up to you to determine which option makes the most sense when shopping online.

Whatever you choose, the most important thing to remember is that you can protect yourself and your money from fraudulent transactions by taking the appropriate precautions. Be sure to remove any stored information in the browser and only shop online from a secure connection on a secure site.