Address Verification Service
The Address Verification Service (AVS) is a system designed to mitigate fraud and minimize chargebacks. It functions by verifying that the billing address entered by the customer corresponds to the address associated with the cardholder’s credit card account.
When a merchant requests authorization for a credit card transaction, the address confirmation is performed as part of the process. The credit card processor then sends a response code back to the merchant, indicating the level of address matching and thereby confirming the ownership of the credit or debit card in a non-face-to-face transaction. Based on this information, the merchant can determine whether to accept or reject the card transaction.
AVS is widely utilized by major credit card companies as a measure to combat card-not-present (CNP) fraud. However, it is important to note that AVS is not infallible. There may be instances where the billing address provided by a legitimate customer does not precisely match the address on record at the card issuer. Factors such as recent relocation or incorrect address records can lead to a mismatch. In such scenarios, merchants face the potential risk of rejecting a genuine transaction.
In the event that a fraudulent transaction manages to bypass the Address Verification Service (AVS) and results in a chargeback, merchants can utilize the information obtained through AVS as part of their defense during the dispute resolution process. By demonstrating that the billing address provided by the customer matches the address on record, merchants can strengthen their case and increase the likelihood of successfully challenging the chargeback. This highlights the importance of AVS not only in preventing fraud but also in providing valuable evidence to merchants when navigating the chargeback resolution process.
Written by Andrii Vovk