What Does AVS Stand For?

AVS stands for address verification service and is a tool used by credit card processors to help prevent fraud and chargebacks. It’s essentially a way for processing companies to compare the billing address a customer enters online with the billing address on record at the credit firm that issued the card.

AVS is one of the most commonly used fraud prevention tools in card-not-present transactions. It’s a simple step in an online transaction portal that makes a big difference in avoiding fraudulent transactions.

What is an AVS check?

An address verification check only takes a split second once a transaction request is sent, but there are a few things that have to happen before the transaction request is made. If you’ve ever made a purchase online, you’re probably familiar with this process:

  1. You find a product to buy online.
  2. You click a buy button which usually takes you to a screen that gathers information.
  3. You input your card number, your name, your address and billing address, and your email address.
  4. You submit your order for verification.

The most important information in an AVS check is the billing address.

Once you hit the button that submits your information and requests the transaction, your billing address is sent through a credit card processor to the credit firm that issued your card. Once there, your billing address is compared to the one on file at the credit firm.

If the addresses match, the AVS has done its job and the transaction will usually go through. If the billing addresses didn’t match, however, the transaction will be rejected.

Is AVS a perfect fraud prevention tool?

AVS is effective in many cases, but it’s not perfect at preventing fraud.

For example, it’s possible to get a false negative from someone who just recently moved. If a person puts their new address in the billing address field but they haven’t updated their information with the credit card company, then the transaction will be rejected because the billing address sent doesn’t match the address on file.

This means it’s possible for the AVS to reject legitimate transactions. This is why many processors—when a billing address is rejected—will display some kind of error message like: “Your billing address did not match the address on file.”

Are there other common fraud prevention tools?

Because AVS has its weaknesses, it’s almost guaranteed that a credit card processor will pair this security tool with others. We won’t go into detail on what exactly these other fraud tools do, but there are quite a few different ways processing companies combat fraud: 

  • CVV
  • Biometric analysis
  • IP address verification
  • 3D Secure
  • Device authentication

You may recognize some of these already. When combined with AVS, these additional fraud prevention tools can almost entirely eliminate the possibility of chargebacks that are the result of fraudulent activity.

Should I look for a processing solution with address verification?

The answer to this question is a soft yes. Most every reputable processing company has AVS built into its online processors. It would be difficult to find any processor that didn’t offer this layer of security.

That said, it’s important to look at what your processor offers in terms of transaction security. While AVS is standard on most processors, additional security measures like 3D Secure are not.

It’s always beneficial to look at how a given processor can help you avoid fraud. Stripe, for example, offers 3D Secure authentication to anyone with a basic account.

FAQs

Do credit cards have billing addresses printed on them?

No. You will not find any information about the address of the cardholder on the card itself—no street address, zip codes, etc. This is one of the reasons AVS checks are effective. If a card is lost or stolen and a fraudulent online transaction is attempted, the fraudster will likely not be able to produce the billing address associated with the card—unless said fraudster has the cardholder’s driver’s license or is a close relative.

How do I know if my processing company uses AVS?

The easiest way to find this answer is to ask your processing company. Because AVS is a pretty standard feature for all online transactions, most processors don’t disclose or advertise it online.

Is AVS important for high-risk merchants?

Absolutely. If your business is considered to be at high-risk for fraud and chargebacks, then any extra security feature will be crucial to avoiding those pesky chargeback fees. In fact, you’ll probably need more than just AVS if your business is high-risk.

If you’re getting a lot of fraudulent charges, ask your processor if they offer any features that can help reduce your risk of chargebacks.

The takeaway

Address verification service (AVS) is a basic security measure used by almost every processing provider to add an extra layer of protection from chargebacks and fraud. It works by comparing the billing address given by the customer at the time of purchase to the billing address on file for the card being used.

If the addresses match, the transaction may go through. If they do not, the transaction will fail until the customer can produce the correct billing address.

AVS is not a perfect security tool and should be paired with other security features like 3D Secure for maximum fraud protection. This is especially true for high-risk businesses.

If you’re looking for a processing provider with great security features for high-risk businesses, check out our review of Payline Data.

Disclaimer

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