Introduction
The first online purchase was made in 1994. Now there are more than two billion online shoppers. What has caused this exponential rise in numbers in less than 30 years?
One of the growth factors of online shopping is the ubiquity of internet access. The other key element is the increased security of online payment processing.
Ecommerce would not be what it is today if it were not for the security solutions that earned the trust of online shoppers. One of those security solutions is the Address Verification Service (AVS).
Find out what AVS is and how it works in this guide.
What is AVS (Address Verification Service)?
The Address Verification Service (AVS) is a fraud prevention tool that enables merchants to confirm a person’s ownership of a credit or debit card during a purchase. The service is available in the United States, the United Kingdom, and Canada.
AVS is used for card-not-present (CNP) transactions associated with:
- Mail orders
- Catalog orders
- Online shopping
How Does AVS Work?
An AVS check consists of the following steps:
- A customer enters data into the payment gateway (or fills a form for a mail or catalog order) and requests a transaction.
- The payment gateway (or a stakeholder processing mail or catalog orders) forwards the billing address provided in the form to the card issuer for an AVS check.
- The AVS compares the numeric values of the billing address entered by the customer with the numeric values of the address associated with the card used for the transaction
- The card issuer returns an authorization status and AVS response code to the merchant.
Note: Learn the difference between an issuer and acquirer.
The AVS code tells the merchant whether the addresses:
- Match fully
- Match partially
- Do not match
- Cannot be compared due to service failure or unavailability of data
After receiving the AVS code, it is up to the merchant or their payment processor to approve or decline a transaction.
Note: AVS mismatches can point merchants to address fraud attempts. Read our guide to address fraud to find out how to recognize it and prevent future attempts.
AVS Response Codes
Here is a comprehensive list of AVS response codes and what they mean:
| Code | Meaning |
|---|---|
| Y | Full match (street address and 5-digit ZIP code match) * |
| X | Full match (street address and 9-digit ZIP code match) |
| W | Partial match (9-digit ZIP code matches, street address does not) ** |
| Z | Partial match (5-digit ZIP code matches, street address does not) |
| A | Partial match (street address matches, zip code does not) *** |
| G | International card (non-US card issuing bank) |
| N | No match |
| R | Retry (system unavailable or timed out) |
| U | Unavailable (no address information or the card issuer does not support AVS) |
| S | AVS not supported |
| T | Partial match (9-digit ZIP matches, address does not) |
| B | Partial match (address matches, ZIP not verified) |
| P | Partial match (ZIP matches, address not verified) |
| C | Address and ZIP not verified |
| D | Full match (international only) |
| G | Address not verified for international transaction (international only) |
| I | Address not verified (international only) |
| M | Full match (international only) |
| F | Full match (UK only) |
* For Discover cards, the Y code means an address-only match
** For Discover cards, the W code means information is not available
*** For Discover cards, the A code is a full match (address and 5-digit ZIP)
AVS Response Codes and Card Issuers
The following table shows code usage by card issuers:
| Code | Visa | MasterCard | Discover | American Express |
|---|---|---|---|---|
| Y | ✓ | ✓ | ✓ | ✓ |
| X | ✗ | ✓ | ✗ | ✗ |
| W | ✗ | ✓ | ✓ | |
| Z | ✓ | ✓ | ✓ | ✓ |
| A | ✓ | ✓ | ✓ | ✓ |
| G | ✓ | ✗ | ✗ | ✗ |
| N | ✓ | ✓ | ✓ | ✓ |
| R | ✓ | ✓ | ✗ | ✓ |
| U | ✓ | ✓ | ✓ | ✓ |
| S | ✓ | ✓ | ✓ | ✓ |
| T | ✗ | ✗ | ✓ | ✗ |
| B | ✓ | ✗ | ✗ | ✗ |
| P | ✓ | ✗ | ✗ | ✗ |
| C | ✓ | ✗ | ✗ | ✗ |
| D | ✓ | ✗ | ✗ | ✗ |
| G | ✓ | ✗ | ✗ | ✗ |
| I | ✓ | ✗ | ✗ | ✗ |
| M | ✓ | ✗ | ✗ | ✗ |
| F | ✓ | ✗ | ✗ | ✗ |
✓ - The code is used by the card issuer
✗ - The code is not used by the card issuer
AVS Example
A person in the US wanting to purchase a product from eBay will have their address verified by Adyen, eBay’s payment gateway. Adyen checks the card data entered in the checkout form and requests an AVS check from the card issuer.
Once the card issuer performs the check, they send a response code back to Adyen. Adyen then decides whether to accept or reject the transaction based on a set of parameters, AVS codes included.
If any of those parameters do not fit the criteria predetermined by eBay, the transaction is denied, and the checkout page displays a message informing the customer that the transaction cannot be completed. The customer can then resort to another payment method or contact their card issuer for further advice.
Note: Find out what is the Preferred Payment Method for Online Shoppers.
AVS – Important Things to Consider
Merchants who consider using AVS should keep the following in mind:
- Using AVS does not prevent fraudulent transactions; it just highlights suspicious ones. Basing order acceptance only on a full AVS match is risky and should be avoided.
- AVS does not protect merchants from chargeback disputes but can aid their case.
- AVS can return false positives (partial matches or complete mismatches) because it only compares the numeric values in the two addresses involved in the check.
- AVS may return a false decline when a customer moves and does not inform their bank about the change of address.
- The recommended practice for order acceptance is the implementation of a multilayered fraud prevention system, such as strong customer authorization, two-factor authentication, or 3D-Secure v2.
Conclusion
When combined with other security practices, AVS adds a further layer of protection to webstores.
Ecommerce merchants should get acquainted with AVS and other online payment security solutions before deciding which online payment processor to partner with. Working together, the merchant and payment processor can develop a security solution with the merchant’s best interests in mind.
