What Is an AVS Check and How Does It Work?

The Address Verification System (AVS) is a security measure primarily used in card-not-present (CNP) transactions like online or phone purchases. Its main function is to help businesses verify a cardholder’s billing address. AVS acts as a fraud prevention tool by confirming that the person making a purchase is likely the legitimate cardholder.

Understanding AVS

AVS compares the billing address provided by a customer with the address on file with their credit card issuer. This system specifically checks the numeric portion of the street address and the zip code. The purpose of this comparison is to confirm the cardholder’s identity and deter fraudulent transactions.

If a thief obtains a credit card number without the correct billing address, an AVS check can flag the transaction as suspicious. By verifying these key address components, AVS adds a layer of security, making it more difficult for unauthorized users to complete purchases. This process helps merchants reduce their risk of financial losses due to fraud.

How AVS Checks Work

The AVS check process begins when a customer enters their credit card details and billing address during an online or phone transaction. The merchant’s payment gateway or processor then sends this transaction request to the appropriate credit card network.

The credit card network, such as Visa or Mastercard, forwards the address information to the cardholder’s issuing bank. The issuing bank compares the submitted address details with the billing address they have on record for that specific credit card account.

After this comparison, the issuing bank sends back an AVS response code to the credit card network. This code is then relayed through the payment processor back to the merchant. The entire sequence typically occurs within seconds, allowing for real-time verification during the transaction authorization process.

AVS Response Codes and Transaction Outcomes

Upon receiving an AVS response, the issuing bank provides a specific code indicating the match status between the provided address and the one on file. These codes can signify various outcomes, such as a full match, a partial match, or no match at all. For example, a ‘Y’ or ‘X’ code often indicates a full match of the street address and zip code, while ‘A’ might mean only the street address matches but the zip code does not.

Merchants utilize these AVS response codes, along with other fraud prevention tools, to make informed decisions about whether to approve, decline, or manually review a transaction. A transaction with a “no match” code, such as ‘N’, typically carries a high risk of fraud and may lead to an automatic decline. Conversely, a full match generally signals a lower risk.

A failed AVS check does not always mean a transaction is fraudulent; it can occur if a cardholder recently moved and has not updated their address with the bank, or if there was a simple typo during entry. When an AVS check results in a mismatch, even if funds are available, the transaction might be declined. Therefore, keeping billing address information current with the credit card issuer is important for seamless transactions.