When a customer makes a card-not-present (CNP) transaction at your business (over the phone, ecommerce, etc.), how do you make sure that the transaction is legitimate? The AVS, or Address Verification Service, is one tool you can use to protect your business from credit card fraud online. However, you may be asking: How does AVS work? Great question! Let’s answer that right now.
What is AVS and What Does It Do?
In order to combat fraud in an online transaction, you need to make sure that the person who is making the purchase is actually the person whose name is on the credit card. How can you confirm this? AVS is a helpful tool that checks for one critical fraud indicator – whether or not the billing address used for the order matches the billing address on file for the credit card. If they do match, it’s likely that the transaction is legitimate. If they don’t, it’s up to the business owner to decide if they want to allow the transaction to be processed.
How Does AVS Work?
In most cases, the AVS verification process occurs when the transaction is submitted for authorization. The payment gateway sends the billing address to the issuing bank, which returns a code that indicates how close of a match the two addresses are. This table shows the different AVS code options and what they mean:
|AVS Letter Code||Match?||What It Means|
|Y||Yes||Full match on street address and five-digit zip code|
|X||Yes||Full match on street address and nine-digit zip code|
|Z||Partial||Five-digit zip codes matches, but street address does not match|
|W||Partial||Nine-digit zip codes matches, but street address does not match|
|A||Partial||Street address matches, but zip code does not match|
|N||No||Street address and zip code both do not match|
|G||International Card||Card was issued by a non-US bank|
|R||Error – Try Again||The system returned a temporary error or timed out|
|U||Error – Data Unavailable||The card issuer doesn’t support AVS or no data was available from the issuing bank|
What Do I Do with This Information?
Armed with this information, the business owner now needs to decide if they are going to allow the transaction to go through or not. You may be wondering why you need to worry about AVS at all, especially if you’re in an industry that doesn’t deal with a very high incidence of fraud. However, you need to think about chargebacks before making this call. Specifically, if a chargeback is issued due to suspected fraud, the business owner is really only able to contest it if they have attempted an AVS check first. If you can prove that the AVS returned a full match, you’re in a much better place to fight your chargeback.
So AVS Protects Me Completely From Chargebacks?
Not exactly. Even if AVS comes back with a perfect match, a business owner may still find a chargeback filed against them that they need to expend time and resources to fight. Some business owners decide that it’s not worth it to expend these resources to fight the chargeback and simply write it off. Many business owners also do not get adequate support from their credit card processors and are unaware of how to appropriately dispute a chargeback.
So…Why Should I Bother with AVS Again?
Although AVS can’t protect you from all chargebacks, it is still an important weapon against fraud. AVS alone isn’t enough to identify all fraud, but it is a great indicator. You should also do things like ask for the CVV, look at the email address for troubling signs, and more – we covered many of these tips here and here. If you don’t currently have AVS set up or aren’t sure how to use it, reach out to your credit card processor. They will be able to turn on this feature and explain how to take advantage of it effectively. By the way, if you’re looking for a credit card processor who takes your security seriously and will work with you to ensure your business is well protected, look no further than 360 Payments. Give us a call at 1-855-360-0360 or drop us a line on our website. We’d love to help you take your card-not-present security to the next level.
PS – Here’s how to protect your business from credit card processing fraud.
PPS – How much do you know about gift card fraud?