Address Verification Service (or AVS) is a great tool for vetting your online purchases in order to avoid processing fraudulent transactions.
This measure checks the address on file for a particular credit card and tries to match it to the address given during checkout for an online transaction. Simply put, it verifies the address of the cardholder. But there are some merchants who don't fully understand the scope of what the AVS actually does and does not do. It acts more like a layer of security that you can choose to integrate into your regular security protocols if you choose to, rather than a surefire failsafe. Depending on your risk threshold, you can choose to yield to specific AVS response codes and either not process those transactions or manually follow up to verify their validity. Based on some of the merchant confusion we've experienced around AVS, we've listed below some of the common misconceptions that we hear and the truth behind them.
#1 | AVS impacts the approval (FALSE)
The AVS result of a credit card transaction doesn’t actually impact if the transaction is approved or declined - it only gives you the result of the address verification. Merchants often assume that if a bad address is entered, the transaction will be declined. That is not the case. It is up to you as the merchant to decide if you want to proceed with the transaction or reverse it. You can actually configure your Helcim account to automatically void transactions that don't generate an acceptable response code. This can help you keep your risk threshold at a level that is acceptable, while also offering peace of mind.
#2 | AVS verifies the cardholder name (FALSE)
Most websites will ask you to enter the cardholder name when entering the rest of the credit card information. However, Visa and MasterCard do not provide a way to verify that cardholder name. Most merchants assume that the name is verified as part of the address verification, but that is not the case.
#3 | All credit card banks participate in AVS (FALSE)
While most banks in the US, Canada, and the UK participate in the address verification service, most international banks don’t. That means that if you’re accepting international orders, the AVS service isn’t very useful in fighting fraudulent transactions.
So it's important to remember that the AVS isn't necessarily an automatic, built-in safeguard against fraud, but rather, another security consideration for when processing online transactions.