What is AVS and how does it secure my transactions?

AVS or Address Verification Service is a tool offered by credit card processes and credit card issuing institutions, such as banks, to merchants. These are single letter codes which are returned to online merchants at the time of authorization via the processing platform that merchants use. This kind of authentication is actually a part of a fraud protection system comprising of multiple layers, which ensures approval for valid transactions and declining of potentially suspicious transactions.

How do Address Verification Service Codes Make Transactions Secure?

These codes are used while checking the billing address that a card user submits, matching it with the billing address that is on record at the server of the issuing bank or financial institution. It is carried out as part of a merchant’s authorization request during a credit card transaction. A response code is sent back by the credit card processor to the merchant – showing that the address match is complete. It helps authenticate the ownership of a card in a transaction where neither an online merchant nor the credit / debit card user can see each other. Such a process helps online merchants determine whether to reject or accept a card transaction.

During the checkout process, when the mailing address is entered by a customer, it is compared to the address which is at the issuing banks file. After the completion of the comparison of addresses an AVS (Address Verification Service) code is returned by the issuing bank to the merchant. This code can be used by the merchant for determining whether to proceed or not to proceed with the online transaction.

Also Read – What is an MCC (Merchant Category Code)?

Is the Address Verification Service a Full Proof System?

When it comes to preventing credit or debit card fraud, AVS (Address Verification Service) code is among the tools that are used most commonly by merchants. But this system is not full proof. This is because it is not always that a customer enters exact building address that can match the address on file with the card issuer. It could easily happen, if the card holder has recently shifted his address or the original address on file was incorrect. In all these cases, even an otherwise legitimate transaction would be rejected by the merchant. However, AVS (Address Verification Service) remains one of the most used credit card authentication procedures today and is used in countries like – the UK, Canada and the US.