What Does AVS Mean on a Credit Card?
Understand AVS (Address Verification System), a crucial security measure that verifies billing addresses to protect your credit card transactions and prevent fraud.
The Address Verification System (AVS) is a standard security feature used in credit card transactions. Its primary purpose is to help prevent fraud, particularly in situations where the physical card is not present. This system involves verifying specific address details provided by a customer during a purchase. AVS helps to ensure that the person making a purchase is the legitimate cardholder.
Understanding AVS
This system compares the billing address provided by a customer during a transaction, such as an online purchase or a phone order, with the billing address on file with their credit card issuer. It is a fraud prevention measure for “card-not-present” transactions. AVS specifically verifies the billing address linked to the card, not necessarily the shipping address for the order.
How AVS Works
When a customer submits payment information, including their street address and zip code, the merchant’s payment gateway initiates an AVS check. This information is sent to the credit card network, which then forwards it to the card issuer. The issuer compares the provided details against the cardholder’s billing address on record. After this comparison, the issuer sends back an AVS response code to the merchant, indicating the level of match between the addresses. This verification process occurs quickly.
Why AVS Matters
AVS offers benefits for both merchants and consumers by enhancing transaction security. For merchants, AVS helps reduce the risk of chargebacks and financial losses from fraudulent transactions, and can help them qualify for lower interchange fees on card-not-present transactions. For consumers, AVS protects their credit card information from unauthorized use, particularly when shopping online. It fosters trust and security in digital transactions.
AVS Responses and Transaction Outcomes
The AVS response code returned to the merchant indicates the outcome of the address verification. These codes communicate whether there was a full match, a partial match, or no match at all. For instance, a ‘Y’ code signifies that both the street address and the 5- or 9-digit ZIP code match, while an ‘N’ code indicates no match for either. Merchants use these codes to decide whether to approve, decline, or further review a transaction.
A full AVS match often leads to automatic approval. A no-match or partial-match response may prompt the merchant to decline the transaction or request alternative verification, such as a CVV check or additional customer contact. AVS is one of several fraud checks; a transaction can still be declined for other reasons, such as insufficient funds or an incorrect CVV.