Privacy, Security
Best Anonymous Payment Methods
March 14, 2023 / My Data Removal Staff
When you think of making anonymous and privacy-friendly payments, we usually think that cash is king. While cash is an excellent choice in many situations, with the rapid growth of online transactions and data aggregation, the need for secure and anonymous digital payment methods has become increasingly important. Online payments have the advantage of convenience and speed, but at the same time, they also pose significant security and privacy risks. For those who want to make purchases and transfer funds while minimizing the personal information they expose, this article is a summary of the different options, including some advantages and disadvantages of each option.
1. Cash!
You just cannot beat cash and its ability to transfer value without revealing any personal information. This is a great option if you are in-person. It works for purchases from markets like Craigslist and retail stores.
Advantages:
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Anonymity: cash payments do not require sharing or exposing any personal information, making them an ideal payment method for those who value privacy.
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Speed: Cash payments are fast and easy, as you can simply hand over the cash to the recipient. This doesn’t work as well for high amount transactions since someone has to verify the amount. Counting the cash for a $10k car purchase takes a few minutes.
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Security: You do not have to worry about your personal information being compromised in a data breach when you purchase something with cash.
Disadvantages:
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Limited Use: Cash payments work best for small transactions, as larger transfers can be difficult to manage. Suitcase? Luggage? Armored truck?
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Inconvenient: Cash payment may be inconvenient, as users need to physically meet in order to transfer funds. Some online services allow you to mail cash to pay, but that is slow and inefficient.
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Surveillance: Cash purchases made in stores can still expose some personal information if you are recorded by CCTVs and security cameras. This is pretty low risk for most people, but it means you are not 100% untraceable.
2. Cryptocurrency
Not all cryptocurrency is the same when it comes to privacy. Bitcoin, the most well-known cryptocurrency, is not known for its privacy-features. Many exchanges follow the traditional Know Your Customer (KYC) laws meaning that you have no privacy when using funds tied to a large exchange. Transactions made using Bitcoin are recorded on a public ledger called the blockchain, which provides transparency and security, but can also be used to trace transactions back to you. There are a number of things you can do to make Bitcoin more private, but this article will not get into the nuances. The Bitcoin Privacy Guide is a great place to start if you’d like to learn more about Bitcoin privacy.
A better option for private crypto payments is Monero. Monero is a privacy-focused cryptocurrency that provides users with greater anonymity and security than Bitcoin. Monero uses ring signatures and stealth addresses to obscure the identity of its users and protect their privacy.This article cannot cover all of the nuances of private Monero usage. Learn more about Monero here on the Monero website.
Advantages:
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Anonymity: Monero transactions do reveal users’ personal information, making it an ideal payment method for those who value privacy.
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Decentralization: Most cryptocurrencies operate on a decentralized network, meaning that there is no central authority controlling the currency. This reduces the risk of fraud and makes it easier for users to make transactions.
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Security: Transactions made using cryptocurrency are secured using cryptography, making it difficult for hackers to steal or manipulate data.
Disadvantages:
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Volatility: The value of cryptocurrencies can be highly volatile, making it risky to hold large amounts.
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Complexity: The technical nature of cryptocurrencies can make it difficult for inexperienced users to understand and use it.
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Limited Acceptance: Cryptocurrencies are growing in popularity, but there are still many merchants and individuals who do not accept the currency, making it less convenient.
3. Prepaid Cards
Prepaid cards are a type of payment card that can be loaded with a specified amount of money and used to make purchases or withdraw cash. Some prepaid cards may require users to provide personal information when purchasing the card or reloading it.
Advantages:
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Anonymity: Some prepaid cards do not require users to reveal their personal information, making them an ideal payment method for those who value privacy.
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Convenience: Prepaid cards are widely accepted by merchants and can be used to make purchases or withdraw cash at ATMs.
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Security: Prepaid cards offer some security benefits, as users are not at risk of having their bank accounts compromised in the event of fraud or a data breach.
Disadvantages:
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Limited Use: Prepaid cards may not be accepted by all merchants, making it difficult for users to make certain purchases. Visa Gift cards can only be used in the US.
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Fees: Prepaid cards may come with fees for activation, reloading, and use, making them less cost-effective than other payment methods.
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Registration: Some prepaid cards have to be registered, i.e. you have to share your personal information to use them.
4. Masked Credit Cards
Masked credit cards are a type of payment card that offer a level of anonymity and security when making online purchases. Masked credit cards are connected to a funding source that is connected to you: usually a credit card in your real name or a bank account in your name. This means they are not 100% anonymous. You still have to trust the issuer of the masked cards with your personal information because the institution that provides you masked credit cards has to know who you are. If there were any legal investigation into purchases that were made with one of your masked credit cards it would be traced back to you.
Advantages:
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Anonymity: Some masked credit card providers allow you to use any name and address with their cards. This hides your personal information from the retailer. They can still share and sell the information you give them, but if you use alias information this will not be your personal information.
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Security: Masked credit cards are easy to manage. If the card number gets stolen or leaked, you can easily turn it off without having to get a new credit card and change it at all of your accounts. It’s not your true banking or true credit card information that is leaked.
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Convenience: You can easily create new masked credit cards for different accounts often with just the click of a button.
Disadvantages:
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Acceptance: Masked credit cards can sometimes look questionable to online merchants. This makes them not as widely acceptable. Some masked cards only work in the US.
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Only virtual: Most masked cards are only virtual, meaning you cannot use them for in-person transactions at retailers.
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Fraud: These cards have a higher likelihood of being flagged as fraudulent than normal credit cards. You might have purchases delayed or canceled if they seem suspicious to the merchant.
5. Semi Anonymous PayPal Account
It is possible to create a PayPal account linked to a masked credit card in an alias name. With a PayPal account that is funded with a masked credit card, you can make purchases online. You have to be careful not to raise any suspicions that would cause PayPal to investigate or freeze your account. PayPal shares a lot of information with other parties. This would just mean the information they share would be your alias, not your real information.
Advantages:
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Anonymity: If your funding source is not in your real name, it protects you from having to share your personal information with the retailer.
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Security: PayPal has good security and you have their consumer protections in place for purchases.
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Convenience: PayPal is widely accepted online.
Disadvantages:
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Requires an account in another name: If you do not have a masked credit card, you do not have many options for creating an account using an alias.
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Mostly virtual: PayPal is used mostly for online transactions.
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Cannot deposit incoming funds: If someone pays you to this account, you cannot deposit the money into your bank account. You would have to spend down the balance.
6. Prepaid Gift Cards
Gift cards are a great option to make purchases anonymously. Most retailers do not require any personal information to be able to redeem them. They are available for most major retailers and can be used on almost anything available in their physical and online stores.
Advantages:
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Anonymity: Retailers do not need your personal information to redeem a gift card.
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Security: Someone would have to steal the physical card from you or get access to the number to be able to use your gift card.
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Multiple form factors: Gift cards can be both physical and in the form of a code or sent via email.
Disadvantages:
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Specific Amount: If your purchase is less than the amount on the card, you must forfeit the balance, make another purchase, or sell the card. If the purchase amount is over what is on the card, you need to make up for it. This can be cash if it is in person, but if it is online, you would then need to provide another form of payment that may not be as privacy friendly.
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Must be purchased anonymously: If you purchase gift cards with a credit card in your name, then they can be traced back to you. Gift cards would have to be purchases with an anonymous or sudo-anonymous (masked credit card) form of payment to protect your privacy.
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Expiration: Gift cards have an expiration date and the remaining balance disappears if you do not redeem it in time.
Total privacy in all of your transactions is challenging if not impossible. There are different advantages and disadvantages in every method. Cash is great for in-person transactions that are not high value, but purchases online require more sophisticated tools. Try out several possibilities listed in this article and find the right option for you that balances convenience and privacy/security. We hope this has been helpful in helping you understand anonymous payment methods and how they can help you maintain your privacy when making purchases.