An Address Verification Service or AVS check is a fraud prevention tool used by credit card processors, issuing banks and ecommerce businesses to detect suspicious credit card transactions. It is one of the most common fraud prevention tools for online transactions and a crucial part of the credit card authentication process.
The AVS check works by verifying the billing address entered by the customer during an online transaction is the same as that registered with the cardholder’s credit card account.
AVS checks are only currently available in the UK, Canada and the United States.
Issues with the Address Verification Service AVS check
The only major issue that can arise with an AVS check is when there is a genuine reason for a difference between the billing address provided by the customer and the address on record at the card issuer. Legitimate reasons for this difference could be a recent house move by the cardholder where the records haven’t yet been updated, or just a genuine error when the address was first registered. This issue, though relatively rare, can sometimes cause a merchant to reject a perfectly legitimate transaction.
Ecommerce businesses should also never rely solely on AVS checks to prevent fraud, but instead use them as part of a broader fraud prevention strategy. Merchants should always use the AVS check in conjunction with other fraud detection mechanisms such as the commonly used CVV.
There are also even more secure fraud detection mechanisms nowadays that can be used along with the AVS check and CVV, such as biometric analysis, IP address verification, 3D Secure and device authentication.
Common AVS check codes
When the AVS check is complete it will return a result via a code number which will indicate if the check successfully matched the addresses or only partially matched the addresses. There are also other codes as described below.
Full match AVS codes
Depending on the credit card being used, a single letter code such as X or Y will usually indicate a full match of the cardholder name, street address and postcode. This code means everything is legitimate and the merchant can be confident of completing the transaction.
Partial match AVS codes
This is where it gets tricky. Many customers may enter the correct address but in a slightly different format, or get a digit in the postcode wrong. This can happen a lot so merchants have to use their judgement when receiving a partial match code from the AVS check.
Such partial match AVS codes include W used by Mastercard, which indicates that the postcode matches but the street address does not. Visa use the P code to indicate that the postcode matches, but the street address does not due to being entered in an incorrect format. American Express use AE2 to indicate that the cardholder’s name is incorrect even though the street address and postcode are correct.
There are numerous reasons why a genuine customer might enter the address details incorrectly, so partial matches are often legitimate transactions, but each merchant must make a decision based on the likelihood of credit card fraud being the reason for the transaction.
No match AVS codes
All three of Visa, Mastercard and American Express use N to indicate there is no match between the street address and postcode. This should result in the transaction being either cancelled or delayed until the address can be verified via an alternative means.
Other AVS codes
All three major credit card issuers also use R as the code to indicate when the Address Verification Service is unavailable. They also use U to indicate when the address could not be verified due to lack of issuer support or because of a system malfunction.
We can help
If you’re interested in finding out more about an Address Verification Service API, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.