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 AVS 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, thereby authenticating ownership of a credit or debit card in a non-face-to-face transaction. This process helps the merchant in determining whether a card transaction should be accepted or rejected.

The Address Verification System (AVS) is a service that verifies if a billing address matches the address of a credit card holder. AVS is a widely used fraud-prevention measure for Card Not Present (CNP) transactions, such as online payments or point-of-sale Mail Order/Telephone Order (MOTO) payments.

Address Verification Service gives you a way to check if the shopper who is placing the order is the same person as the credit card holder, which is more likely if the billing address details match.

Address Verification Service 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 is an important part of the credit card authentication process and applies to cardholder addresses from the United States, Canada, and the United Kingdom.

The Address Verification Service (AVS) is a tool that enables merchants to detect suspicious credit card transactions and prevent credit card fraud.

Address Verification Service verifies that the billing address entered by the customer is the same as the one associated with the cardholder’s credit card account.

Address Verification Service response codes are returned to the merchant during the authorization process and help the merchant determine the next action, which could be transaction approval, exception, or decline.

Payment gateways should use Address Verification Service in conjunction with other fraud detection methods, such as CVV validation codes, IP address verification, biometric analysis, and device authentication.

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 billing address entered by the customer is the same as the one associated with the cardholder’s credit card account. AVS is widely used by the major credit card companies to stop card-not-present (CNP) fraud.

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 Address Verification Service code to the merchant. Merchants can use this AVS code as a guide to determine how to proceed with the transaction.

Address Verification Service response codes are single-letter codes that are returned to the merchant during the authorization process through their processing platform. These codes help determine the next action, which could be transaction approval, exception, or decline. 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.

How Verification Works 

One of the most widely used fraud prevention tools in card-not-present transactions is the Address Verification Service, or AVS.

Originally developed for use with mail and catalog orders, Address Verification Service is now commonly used by e-tailers, and other card-not-present merchants, as a method to verify the validity of an order they receive. An AVS check compares the billing address used in the transaction with the issuing bank’s address information on file for that cardholder. Depending on whether they match fully, partially, or not at all, the merchant can use that information in their decision on whether or not to accept or cancel the order.

As such, seeing a full Address Verification Service match on a transaction during order review offers a basic level of assurance for merchants that the order is not fraudulent. However, most merchants don’t understand how best to use AVS in fraud detection, nor their liability on transactions they accept where the AVS check returned a full match.

In this article, we’ll give a background on Address Verification Service and the details on how the service works, share who holds the liability for paying a chargeback on a transaction with full AVS match, and how to use AVS in order review.

Address Verification Service is usually performed by the banks during the time of card authorization. It can be done through the telephone when the card holder is not present or through a POS terminal. The billing address on the card is corroborated with the address on the bank’s files and if the address matches, the transaction is carried out. It is possible that even after the billing address was correct, the transaction is declined. There can be a number of reasons for that, the misspelling of the address, or outdated information, etc., can also cause decline of a transaction.

When a shopper pays for a transaction, you can collect their billing address details. Then, you send that data in the Billing Address object in the payment authorisation request. When you've enabled AVS, the system will check if and to what extent these billing address details match the issuing bank's credit card holder information on file.

The response to the payment request will contain an Adyen AVS response code that is mapped to a raw AVS response code. You can see the mapping in the mapping table.

When the Address Verification Service check results in a mismatch, you can trigger a risk rule. You can use the standard risk rule Billing address does not match cardholder address, or you can create a custom risk rule. Based on the AVS response, you can decide what to do with the payment: you can accept, make an exception, or cancel a transaction.

Address Verification Service is supported for card payments with Visa, MasterCard, Discover or American Express. Credit card issuers in the United States, Canada, and the United Kingdom must support AVS verification requests when you send them in, however, using AVS is not mandatory for you as a merchant.

Why Do I Need an Address Verification Service?

Address Verification Service, also known as AVS, is a security measure that is used to prevent fraudulent transactions on any debit or credit card.

As the name suggests, Address Verification Service is based on the verification of the address of the card holder. This is especially important for online transactions, the chances of there being a fraudulent transaction are reduced massively as a card that is protected by AVS will confirm the billing address of the card holder.

Merchant Account Address Verification System Explained:

What is an Address Verification System? As the name implies, an Address Verification System (AVS) verifies that the billing address of the credit or debit card matches the address that was given by the customer. An AVS is an optional feature that can be enabled for e-commerce payment gateways and virtual terminal credit card sales. Because AVS only verifies the numeric portion of the address, certain anomalies like apartment numbers can cause false declines; however, it is reported to be a rare occurrence. 

If enabled, merchants will incur a small Address Verification Service fee that usually costs between 5-25 cents per sale, but the fee varies by processor and can be more expensive. Merchants will only incur an AVS fee if the feature is enabled in the payment gateway and the customer’s address is entered. Using AVS adds security and can lower the overall transaction fee of the credit card sale.