What Is an AVS Code? A Breakdown of AVS Responses

Robust security measures are essential for businesses and consumers in digital transactions. Online payment systems use various tools to identify and mitigate risks, safeguarding financial interactions and maintaining trust. Ensuring transaction integrity is paramount as card-not-present fraud continues to evolve.

What is AVS

The Address Verification System (AVS) is a fraud prevention tool for card-not-present transactions, such as online or phone purchases. Its primary function is to verify the cardholder’s billing address against the address on file with their credit or debit card issuer, helping merchants confirm the legitimate cardholder and reduce fraud risk.

This system is used by major credit card companies in the United States, Canada, and the United Kingdom. When a customer enters their billing address, AVS checks the numeric components of the street address and the zip code. AVS is a security measure often part of a multi-layered fraud prevention strategy.

How AVS Functions

When a customer makes an online payment, their billing address and credit card details are transmitted. The merchant’s payment processor receives this data and forwards it securely to the cardholder’s issuing bank. This transmission occurs automatically as part of the transaction authorization request.

The issuing bank compares the provided address details against the billing address on file for that specific credit card. Following this comparison, the bank generates a single-letter AVS response code. This code indicates the degree of match or mismatch between the submitted address and the address on record.

The AVS response code is then sent back to the payment processor, which subsequently relays it to the merchant. This entire verification process usually takes only a few seconds, operating seamlessly in the background during the transaction. Merchants use this returned code to make an informed decision on whether to approve, decline, or further review the transaction based on their established risk parameters.

Interpreting AVS Responses

Upon receiving an AVS response code, merchants gain insight into the transaction’s risk level. These single-letter codes, though varying across card networks, generally indicate how well the provided billing address matched the bank’s records. For instance, common codes include ‘Y’ or ‘M’ for a full match of the street address and a 5-digit zip code, or ‘X’ if a 9-digit zip code also matches. Such codes typically signal a low-risk transaction.

Partial matches are indicated by codes like ‘A’ (street address matches, zip code does not) or ‘Z’ (zip code matches, street address does not). These partial matches might prompt a merchant to apply internal rules or flag the transaction for additional review, balancing fraud prevention with customer convenience. Conversely, a code ‘N’ signifies no match for either the street address or the zip code, indicating a higher risk of fraud.

Other codes provide different information; for example, ‘G’ may indicate an international card, while ‘U’ or ‘R’ suggest that the issuing bank was unable to verify or does not support AVS. Merchants retain the discretion to approve or decline a transaction based on their fraud prevention policies, even with a partial or no match. If a customer encounters an AVS-related issue, such as a transaction decline, they should double-check their billing address for accuracy and contact their card-issuing bank to ensure their address on file is current.