Hello merchants! Similar to PCI (which we covered in another blog here), you may have heard of a pesky acronym: AVS. What is AVS? Why is it necessary? Did I leave the stove on? These are probably the questions that you have whenever you hear about AVS if it hasn’t been properly explained to you. Well, worry about your stove no longer, because today we will be doing exactly that! That’s right, today we are breaking down AVS. The stove part is on you.
What is AVS?
Address Verification Service, or AVS, is a system built by Mastercard to verify a card holder’s address against what they have on file. If a purchaser enters an incorrect address, then the transaction is not processed and they need to explore a rolodex of previous addresses. In essence, it is a form of security that works to protect customers from fraudulent purchases. It may not prevent a fraudulent purchase on its own, however, it provides an extra layer of security that can make the difference between a customer owing multiple thousands of dollars in oreo cookies or not.
How Does it Work?
This is best explained through an example:
Let’s say that an individual, Joe Schmoe, wants to apply for a credit card. When he does, a billing address will be needed to finish the application, so he enters where he currently lives, 777 Schmoulevard Road in Portland, Maine. The company approves of his application and he gets his card. A decade later, he moves to Florida and changes his address with the card company to 313 Schmoe Street. However, old habits die hard and when he goes to make a purchase, in person or online, he enters his old Schmoulevard Road address, and his card is declined.
He was declined because his on file address did not match what he entered. The simple remedy to this situation is to attempt the transaction a third time and match the information correctly. However, even if he remembered the correct address, but misspelled is, such as entering “Stret” instead of “Street”, or even using “St.”, he would have also been declined. The addresses must match exactly. With this system, a fraudulent user would also need to enter the information the same way the actual user would, abbreviations and all.
In any case, where the incorrect information is provided, AVS will return a code to identify the exact reason for the information not matching. This could include an incorrect zip only, incorrect street address, etc. In certain cases, your processor will automatically decline it, however, there are others where you will have the option to approve or decline.
How Does It Affect Me?
Depending on your merchant processor, you may have an additional fee incurred whenever AVS is used. That being said, the fee is incredibly small and can be as low as $.005 if the card is present. That’s less than half of a penny, per transaction. Without the card, it may cost up to $.01 per transaction, which is still incredibly small. The advantage here is that your customers have an additional layer of security to protect them against fraud for a minimal and almost non-existent fee.
If you have more questions about AVS, contact us by calling our support line at 1-800-808-1622 or emailing us at firstname.lastname@example.org.