What Is an AVS Check and How Does It Work?

An Address Verification System (AVS) check is a security measure used in transactions where a physical payment card is not presented, such as online purchases or phone orders. This system helps confirm the cardholder’s identity and prevent fraudulent activities. By verifying address information, AVS adds an important layer of protection, reducing risks for both consumers and merchants.

What is an AVS Check

An AVS check is a fraud prevention tool that compares the billing address provided by a customer during a transaction with the billing address on file with their credit card issuer. Merchants widely use this system for “card-not-present” transactions, including online shopping, mail orders, and telephone purchases. The primary goal of an AVS check is to verify the legitimate cardholder is making the purchase.

This verification process focuses on matching the numeric components of the billing address, such as the street number and postal code, against the records held by the issuing bank. AVS does not typically verify textual parts of an address, like street names or city names. This targeted approach helps merchants assess transaction legitimacy by confirming the billing address, which is a key piece of information known only to the cardholder.

How AVS Checks Work

The AVS check process begins when a customer enters their billing address details during an online or phone transaction. This information is securely transmitted by the merchant’s payment gateway to the credit card issuer. The card issuer, which holds the cardholder’s official billing address on file, performs a quick comparison of the submitted address against its records.

This comparison typically focuses on numeric elements like the street number and ZIP code. After the comparison, the card issuer sends back a specific AVS response code to the merchant through the payment gateway. This entire verification occurs in real-time, often within seconds, as part of the overall transaction authorization request. The response code indicates the degree of match between the provided address and the address on file, allowing the merchant to make an informed decision about proceeding with the transaction.

Why AVS Checks are Used

Merchants utilize AVS checks primarily to mitigate the risk of fraud, especially in scenarios where the physical card is not present. This automated verification adds a significant layer of security to online and other remote transactions. By confirming the billing address matches the cardholder’s records, AVS helps prevent unauthorized purchases made with stolen card numbers.

Implementing AVS checks can substantially reduce the likelihood of chargebacks, which occur when a customer disputes a transaction. Chargebacks can be costly for merchants, involving fees and lost revenue. AVS provides concrete evidence of due diligence in fraud prevention, which can be beneficial in disputing fraudulent chargebacks. While AVS is a powerful tool, it complements other security measures like Card Verification Value (CVV) codes, working together to create a more robust defense against financial crime.

Understanding AVS Response Codes

AVS checks do not simply return a “yes” or “no” answer; instead, they provide specific response codes that indicate the level of address match. These codes offer detailed insights into whether the street address, ZIP code, or both, match the information on file with the card issuer.

For example, a common code like ‘Y’ typically signifies a full match where both the street address and the 5-digit ZIP code correspond. Conversely, an ‘N’ code usually means neither the street address nor the ZIP code matches, indicating a high-risk transaction. Other codes may indicate partial matches, such as ‘A’ for a street address match but no ZIP code match, or ‘Z’ for a 5-digit ZIP code match but no street address match.

Merchants interpret these codes to decide whether to approve, decline, or further investigate a transaction. While a full match provides a higher level of assurance, merchants often set their own risk parameters to accept or decline transactions based on various AVS codes, recognizing that AVS is one component within a broader fraud prevention strategy.