An address verification service (AVS) is a fraud-prevention service provided by credit card processors that can help merchants to determine the billing address provided by a customer is the same one that’s registered to their card account.
Using AVS is one of the most common ways to prevent credit card fraud. However, it can cause genuine transactions to be declined because of minor differences in addresses or because the cardholder has moved and not yet updated their address.
How Does AVS Work?
When the customer enters their address into the checkout form and hits the transmit button, the payment gateway sends the address data to the credit card (Visa, Mastercard, or American Express)
The credit card then sends this address data to the card processor to compare it to the address stored on file by the issuer.
The credit card processor generates an AVS response code depending on if the addresses match or not and sends the response code back to the merchant website. If the address does not match the one on record, the card transaction may be declined.
It’s not necessary for the whole address to match exactly what’s on file. In fact, usually only the house number and zip or postal code are compared.
If the address is a partial match, the AVS code will indicate which part of the address verification failed.
Declined payments due to an AVS mismatch usually result in the funds being held and subtracted from the customer balance until the authorization request expires, which is usually around 7 days.
This can cause customer service issues as it will appear to the customer that the funds have been taken from their account, even though the card authorization request was denied and the card was not charged.
Understanding AVS Codes
Each credit card brand uses slightly different AVS codes and interprets them in a different way. For this reason, you should refer to the official documentation from each credit card.
For example, code “A” indicates that the street address matches but the zip code does not for Mastercard, but for American Express the same code means that both the address and zip match.
AVS is only available for certain brands of credit cards in certain countries; mainly the USA, Canada, and the UK.
You should be use AVS in combination with other anti-fraud measures such as requiring CVV numbers and flagging suspicious orders.