Credit card transactions are an integral part of the online business community. But merchants often experience problems with the online credit card payment process. A common problem for merchants during this process occurs when verifying the consumer’s address. In order to protect merchants from these problems, credit card companies typically offer an Address Verification Service (AVS).
What is AVS?
It is, essentially, a checkpoint. When the consumer enters an address during an online transaction, the AVS checks that address against the billing address on file with the consumer’s issuing bank, to ensure that they match. The address is not checked as an entire unit. The initial portion of the street address, the numbers, and the zip code are checked separately. If a merchant uses AVS, they can monitor whether the consumer is entering information that is consistent with what the bank has on file for that consumer. This service can verify consumers, and provide protection against fraud.
The Merchant’s Responsibility
It’s not the merchant’s responsibility to “hire” one of these services; address verification is provided with the credit card, and benefits both the consumer and the merchant during a credit card transaction. Typically, when a merchant completes a credit card transaction, that card is authorized; this is part of the process. The merchant’s only responsibility is to make sure this authorization happens, because the AVS is applied simultaneously as a part of that authorization. The merchant forwards the information the consumer enters during the online transaction to the credit card company, then the credit card company checks that information with the issuing bank. If the address numbers are accurate, the issuing bank authorizes the charge.
Credit Company Codes
Online transactions don’t afford merchants the opportunity to visually check a credit card, so they often rely on the AVS response created by the credit card authorization. Visa, Mastercard, Discover and American Express all offer address verification services with various similarities and differences. The merchant should be aware of the different codes used by each credit card brand. Internationally, not all credit companies and issuing banks supports cards with AVS.
The credit card authorization and the address authorization are returned to the merchant at the same time. The AVS provides the merchant with a letter code — one letter indicating that the address details are accurate, or that there is a specific problem with the numbers entered for that address. “Y” is the code for “yes, all details match.” “A” indicates that the address was the problem, not the zip code. “Z” means the zip code was the problem, not the address numbers. Other codes might be used as well, but in general, these codes help the merchant determine whether the address entered during the transaction matches the billing address.
Merchants will find that authorization may be granted for a card even though the AVS has returned a mismatched code. The merchant is given the option, in this case, to reverse the charge and void the sale. As the business owner, pay attention to AVS codes. If you stay vigilant, you will protect your business from fraudulent transactions and chargebacks.