Address Verification System (AVS) is a security measure used by payment processors and credit card companies to prevent fraudulent transactions during online or virtual payments. It compares the billing address provided by a customer during a transaction to the address associated with the card account.
When a payment is initiated, the merchant asks the card network or issuing bank to check the billing address provided by the payer. The card company or bank returns a response with codes that indicate the degree of address similarity. The merchant will decide whether to accept or decline the payment based on this information. The main purpose of the AVS is to validate that the credit card owner is the same person making the purchase. There can be an AVS mismatch and here are three best ways to fix AVS mismatch.
What is meant by an AVS mismatch?
A discrepancy between the billing address submitted during a credit card transaction and the billing address with the credit card issuer is referred to as an AVS mismatch. This mismatch can result in the transaction being denied or requiring additional verification.
When an AVS mismatch occurs, it does not necessarily indicate a fraudulent transaction. However, it does raise a red flag and can trigger additional security measures, such as requiring further verification or even declining the transaction.
Causes of AVS Mismatch
There are several reasons why an AVS mismatch may occur, including the following:
Inaccurate Billing Information:
The most common reason for an AVS mismatch is inaccurate billing information. If a customer enters their billing address incorrectly during a transaction, AVS will flag the transaction for an AVS mismatch.
Recent Move or Change of Address
If a customer has recently moved or changed their address, the address associated with the card’s account may not be up to date, resulting in an AVS mismatch during the transaction.
Virtual Credit Cards
Virtual credit cards are temporary credit card numbers that are generated for a single transaction. They are often used by customers who are concerned about the security of their credit card information. However, virtual credit cards do not have billing addresses, which can result in AVS mismatches.
Non-US Billing Addresses
AVS is a US-based system, and it only verifies US billing addresses. If a customer uses a credit card registered in a different country than the billing address provided during checkout, an AVS mismatch may occur.
Some Banks Do Not Support AVS
Some banks do not support AVS, meaning the transaction will still go through without the additional security of AVS verification. This can lead to an increased risk of fraudulent transactions.
Consequences of AVS Mismatch on Merchants and Costumers
AVS mismatch can have several negative consequences for both merchants and customers. Here are some potential cons of AVS mismatch:
Delays in Transactions
AVS mismatch can have a significant impact on merchants. When a transaction is flagged for an AVS mismatch, the merchant may be required to verify the customer’s identity before the transaction can be approved. This can result in delays in transaction processing, leading to frustrated customers and lost sales.
False Declined Transactions
AVS mismatch can also prevent a valid transaction if a customer mistakenly inputs his address or is blocked by fraud anticipation tools, which may result in a false decline. Additionally, if a customer has an outdated billing address with their card issuer, this may result in a false decline.
Lost Sales
Another significant con of AVS mismatch is the potential for lost sales. If a customer encounters an error during checkout, such as an AVS mismatch, they may abandon their purchase and shop elsewhere. This can be especially damaging for merchants who rely heavily on online sales, as lost sales can significantly impact their bottom line.
Customer Frustration
Customers who experience AVS mismatch may become frustrated with the checkout process and may not return to the merchant’s website. This can damage the merchant’s reputation and reduce customer loyalty. Additionally, customers may not understand why their transaction was declined, leading to further frustration and negative experiences.
False Sense of Security
AVS may give merchants a false sense of security, as it only verifies the billing address and does not confirm the cardholder’s identity. This means that AVS may not prevent all types of credit card fraud, and merchants should use additional security measures to prevent fraud.
The steps to fix an AVS mismatch are given below:
Confirm the billing address: Verify that the billing address entered during the transaction matches the address on file with the cardholder’s bank. Correct the address and reprocess the transaction if it was mistyped or incomplete.
Contact the customer: If the address provided during the transaction is correct, contact the customer to confirm their billing address. The address on file with their bank may need to be updated or corrected, and they may need to update it with their bank.
Retry the transaction: Retry the transaction once you have confirmed the correct billing address. If the AVS mismatch persists, contact your payment processor or the cardholder’s bank for assistance.
It’s important to note that if you suspect fraud, contact your payment processor and follow their recommended steps to prevent further fraudulent transactions.
Is AVS foolproof?
According to the Federal Trade Commission (FTC), AVS is a useful tool for preventing credit card fraud but is not foolproof. Criminals have found ways to bypass AVS checks, such as using stolen credit cards with valid billing addresses or by using virtual credit cards that do not have an associated billing address. Therefore, while AVS is a useful security measure, it should be part of a comprehensive fraud prevention program.
How to Prevent AVS Mismatches?
To prevent AVS mismatches, merchants should take several steps, including:
Verifying Billing Information
Merchants should verify the billing information provided by customers during checkout to ensure that it is accurate. This can be done by using address verification software that compares the address entered by the customer to the billing address of the card issuer.
Some popular options include address verification are:
Addressy
Loqate
SmartyStreets
Experian Data Quality
These software options can verify a customer’s address during checkout, reducing the likelihood of an AVS mismatch. Some software options offer additional features, such as geocoding and real-time address validation. Merchants should research a software option that best meets their needs and budget.
Using Fraud Detection Software
Merchants should use fraud detection software that analyzes transactions for suspicious activity. This can include looking for transactions with high dollar amounts, multiple transactions from the same IP address, or transactions with shipping addresses that do not match the billing address.
Using 3D Secure
Some payment processors utilize the 3D secure protocol to bolster the security of online transactions. This protocol requires customers to provide additional authentication, such as a one-time password or biometric authentication, before transaction approval. This can help mitigate fraudulent activities and minimize the risk of AVS mismatches.
Educating Customers
Merchants should educate their customers on the importance of accurate billing information and the risks associated with virtual credit cards. They should also provide clear instructions on entering billing information during checkout to minimize the risk of errors.
Final words
By taking proactive steps to prevent AVS mismatches and other forms of fraud, merchants can help protect their customer’s financial information and maintain their reputation in the marketplace. AVS is an important security measure used by payment processors and credit card companies to prevent fraudulent transactions during online or virtual payments.
It’s important to note that while AVS is a useful tool for preventing credit card fraud, it is not foolproof, and merchants should use it as part of a comprehensive fraud prevention program. If you suspect fraud, you must contact your payment processor and follow their recommended steps to prevent further fraudulent transactions.
