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.
