What Is Address Verification?

Any merchant that accepts credit cards, whether in a physical store, over the phone, through the mail, or on the Internet, risks a certain degree of fraud. There is nothing new about stolen cards and card numbers, or fake cards and numbers. That is why mechanisms have evolved to protect Mail Order/Telephone Order (MOTO) and Internet merchants that need to deal with "card not present" transactions.

The Address Verification Service (AVS) provided as part of the standard "card swipe" process and, more recently, embedded holograms, and on card photos have all been deployed overtime to help manage physical world credit card fraud. The Internet, however, introduces a whole new level of risk. 

On the anonymous Internet, it's all too easy for someone to hide behind an assumed or stolen identity. There are no photo IDs or signatures as of yet. Employees can't watch for guilty looks or nervous twitches as indications of wrong doings. 

Characteristics of each transaction are verified against the cardholder billing records kept by VISA/MasterCard; card holder name, billing address, postal/zip code, and shipping address.

AVS will verify if the address given by the cardholder actually matches their billing address when they applied for the credit card. When these don't match this sends a flag to the merchant to implement more safeguards. All credit card processing services by Arvic provide for AVS to all our merchants! 

Who loses? No matter who perpetrates credit card fraud, the big loser is the merchant, followed closely by the bank and then us. While consumers are provided with a certain degree of protection if their credit card numbers are stolen and misused, Internet merchants are fully liable for all transactions because these transactions are classified as "card not present." As a result, each fraudulent credit card transaction usually results in a charge back. A charge back is a forced refund to the customer via the merchants bank account. Merchants new to the Internet often begin by accepting fraud and the resulting charge backs as part of the price of doing business. Then they regret this after they end up terminated by their bank for too many charge backs.

Credit card associations penalize merchant banks for charge backs. Naturally, the bank passes the fines on to the responsible merchant, and these penalties can be severe. Therefore, performing AVS on all transactions greatly reduces a merchant's exposure to risk.

The entire process of performing AVS is completely transparent to the consumer. Declines can be handled politely to keep the door open to legitimate orders by displaying a message similar to: "We are unable to process your credit card payment at this time. If you still wish to purchase this product or service, please  call us at 1-800.".  At this time the merchant can obtain more information from the customer to verify why the address didn't match such as recently moved, city changed zip codes, etc. The merchant can also ensure their product is shipped via registered mail with a return signed receipt to ensure it was received by the proper person.

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