An AVS (address verification service) is a service offered by credit card processors to mitigate fraud. An AVS matches the credit card number to the associated billing address on file at the issuing bank. If the information doesn’t match, the merchant is alerted and can then decide whether to accept or decline the transaction.
AVS is available with Visa, Mastercard, American Express and Discover, and widely available in the U.S., Canada and United Kingdom. AVS is optional for merchants but definitely worth considering as part of your payment process. However, while AVS is an excellent and quick line of defense against fraud, the service does have some limitations so you should be aware of these, including:
- AVS does not always provide a clear-cut response. The system uses a number of response codes. In some cases, the response code might elicit a partial decline or even a false decline. AVS is generally effective, but not 100% foolproof.
- Sometimes legitimate transactions generate a decline response because of cardholder or system error. For instance, if the cardholder inputs the wrong address or zip code, the information will not match. Another problem arises if the cardholder has multiple residences and selects an address/zip code that differs from the one on file for that card. Another rare but possible situation occurs when an apartment number rather than a street number generates a mismatch. Declined transactions in these and similar situations require delicate handling by the merchant so as not to alienate the customer — so merchants need to be aware that such things may occur.
- AVS works for transactions that occur in the same country in which the credit card was issued. Some countries do not allow customer data verification at all, and for the most part, a foreign credit card will not be accepted in your AVS. This is an especially important thing to keep in mind for online businesses serving international markets.
- A full AVS match does not eliminate the merchant’s liability for a fraud-related chargeback. Even with a full match, the merchant will have to participate in the dispute and provide evidence in his/her defense. Having a full match through AVS definitely strengthens the merchant’s case, but is not in and of itself guaranteed liability protection.
The bottom line is that AVS is a great fraud mitigation enhancement, but not a “magic bullet” that allows you to do nothing else to protect your business from fraudulent transactions. Depending on the nature of your industry, clientele, order size and order type, you will need varying levels of additional fraud security in addition to AVS. Nevertheless, AVS is a solid “front line” screening mechanism to weed out many types of fraudulent transactions that might otherwise escape scrutiny.
If you have further questions about AVS specifically or fraud mitigation in general, please contact us. We are happy to review your current setup and look for ways to improve it.