What Is the Address Verification Service (AVS)?
The Address Verification Service (AVS) is a tool provided by credit card processors and issuing banks to merchants in order to detect suspicious credit card transactions and prevent credit card fraud. The Address Verification Service checks the billing address submitted by the card user with the cardholder's billing address on record at the issuing bank. This is done as part of the merchant's request for authorization of the credit card transaction. The credit card processor sends a response code back to the merchant indicating the degree of address matching, depending on which the credit card transaction may be accepted or rejected.
AVS is one of the most common tools used by merchants to prevent credit card fraud. However, it is not a foolproof system, since the billing address provided by a bona fide customer may not always match the address on record at the card issuer. Reasons for such a mismatch would be a recent move by the cardholder or an address of record that was incorrect to begin with. In such cases, the merchant runs the risk of rejecting a perfectly legitimate transaction.
AVS applies to cardholder addresses from the U.S., Canada, and the United Kingdom.
Understanding the Address Verification Service (AVS)
The Address Verification Service (AVS) is a fraud prevention system that, when used effectively, can help to limit fraud and charge-backs. AVS works to verify that the address entered by the customer is the same as the one associated with the cardholder’s credit card account. AVS is a MasterCard service designed to stop card-not-present (CNP) fraud; however, it is now widely used by many major credit card companies.
During the checkout process, a customer enters their address, which is then compared to the address on file with the issuing bank. Once the addresses are compared, the issuing bank returns an AVS code to the merchant. Merchants can use this AVS code as a guide to determine how to proceed with the transaction. Typically, AVS authentication is used as part of a multilayered fraud protection system to ensure that valid transactions are approved, and those deemed suspicious are declined.
When a customer enters their address during checkout, the following happens:
- The merchant's payment gateway transmits this address data to the customer’s credit card brand (e.g. Visa, MasterCard, Discover, or American Express).
- The credit card brand then sends this information to the issuer. The issuer compares the address with the address stored on file.
- The issuer then sends an authorization status and associated AVS response code to your payment gateway.
This process takes only a few seconds and is invisible to customers.
It’s important to understand that AVS is not a guaranteed fraud prevention solution. A payment gateway or other payment solution should be using AVS in conjunction with other fraud detection mechanisms, such as CVV, biometric analysis, IP address verification, 3D Secure, and device authentication.