AVS (Address Verification Service)
Customers are increasingly becoming victims to credit card fraud. To prevent this, there are numerous systems and standards that ensure high level of security for payments on the Internet. One such method is the AVS (Address Verification Service). Any merchant offering credit card payment can use AVS to significantly reduce the risk of fraud for their customers. The procedure uses the specified postal code to verify the identity of the buyer.
AVS – How it works and its advantages
AVS can prevent fraudsters from using a stolen credit card. Even if the credit card number is false, AVS helps verify the identity by comparing the credit card information with the postal address or zip code provided by the buyer. If the postal code does not match the data stored in the credit card account, the payment is then blocked. Only if the billing address matches the address on the credit card account – the payment is allowed.
Protection for credit card holders and online merchants
AVS not only protects the credit card holder, but the online merchant as well. If the payment has already gone through, the customer reports the credit card fraud, and the merchant must perform a chargeback and pay any fees incurred. The cancelled transaction is charged back to the customer’s account, leaving the merchant on the hook for the costs. After all, he has already shipped the goods. This type of fraud happens to many merchants, and as a result the industry suffers losses of hundreds of millions of euros every year. AVS can prevent the majority of such fraud attempts.
Higher probability to prevent frauds
The only exception to this procedure is if the fraudster actually knows the correct address of the credit card holder. For example, if the credit card has been lost along with the entire wallet, such a case is a realistic possibility. In this case, AVS would allow the credit card transaction to pass through. By using a different delivery address, the fraudster could get the goods as well. Nevertheless, the procedure prevents a large proportion of false credit card payments and is a good solution for merchants to protect themselves against fraud. Another weak point of AVS is the comparison of data solely based on the postal code, while street name and number are not compared.
Combine with other security standards
Some versions of AVS already collect data on postal codes, where fraud attempts often take place. When an online credit card payment is made, the IP address is used to pinpoint the location where the credit card user is presently staying. If this is in an area of high fraud risk, the payment is then blocked. The cost of this service to the merchant is usually a small monthly fee. As a supplement to other security standards, AVS remains a good way to significantly reduce the risk of credit card fraud.
