Verifying cardholders is not always easy for business owners, who may not have face-to-face contact with their customers. Gas station owners, online store operators, and mail-order houses may not be able to ask for secondary ID when transactions are made. AVS uses information from the billing address, or an automated prompt for a ZIP code, to gather this information and compare it to what MasterCard and Visa have on file. From a financial standpoint, merchants can see a small discount on authorizations when AVS is utilized, since it offers an extra level of security.
Address Verification adds a layer of security for transactions by using street address and/or ZIP code information to determine whether to approve the sale. For example, in an address entered online as “123 Anywhere St, Anytown, USA 44444,” the AVS system would use the street number (123) and the ZIP code (44444) to compare against Visa or MasterCard billing address information. At a store, the ZIP code may only be requested. In either case, it is important for the customer to give correct billing address information.
At self-service gas pumps, consumers may feel tripped up when prompted to enter their ZIP codes. However, unattended gas sales can be a big avenue for fraud and stolen card use, so a thief may be stopped if he or she does not know basic information about the victim’s address. Similarly, online card fraud can be stopped when the billing address AVS does not match the information on the card. Even when there is a false positive for fraud on AVS information, the e-commerce store can call the customer and request more information that would confirm the cardholder’s identity.
In person AVS usage can be programmed into credit card terminals and POS devices. Most of the time AVS verification at the point of sale is done on registers where the customer swipes the card and has access to a keypad or PIN entry device. It is also possible for the cashier to ask for the ZIP code and enter it in. No matter how AVS info is collected, cards can be declined when information does not match. A common authorization code, “Declined due to AVS mismatch,” can cause issues for cardholders since the available credit on a card may be reduced until the issuing bank removes a hold on the card.
There are some controversies and legal issues when requesting AVS information. For example, in California and Massachusetts it may be illegal to ask for ZIP code information, as this is seen as a privacy violation. Many organizations go beyond using AVS info just for card verification, and also save the data for marketing purposes. Therefore, you will want to check with your processor to ensure that you are following local laws for address verification.
At CPN, we recommend using whatever tools you can to fight credit card fraud. From a profitability standpoint, you owe it to yourself to avoid the headaches involved with chargebacks, retrievals, and lost money associated with card theft. Furthermore, fraudsters often work in groups, and a single successful act of fraud could make you a target for more organized theft schemes. While customers may find card verification to be inconvenient, a series of thefts and chargebacks could push you in to the high risk processing category. By using several layers of security, including AVS, CVV, and ID checks, you can preserve your preferred processing rates and make it tougher for data thieves to prosper.