What Is AVS?

Address Verification Service (AVS) is an anti-fraud system that merchants commonly use to help identify credit card fraud. AVS checks whether the address entered by the customer matches the address on file for the cardholder’s credit card account. It is now widely used by many major credit card issuers and merchants. At present, AVS generally applies to cardholder addresses in the United States, Canada, and the United Kingdom.

During online checkout, in addition to entering your credit card number, expiration date, and CVV, you are usually also asked to enter your billing address. That address is then checked through AVS. The verification method is to compare the address you enter with the address on file at the bank. After comparing the address, the issuing bank returns an AVS code to the merchant. The merchant can then use that AVS code as guidance in deciding how to handle the transaction.

AVS is typically used as part of a layered fraud protection system to help approve valid transactions while rejecting suspicious ones. Other verification methods include:

  • Name, card number, expiration date, and CVV verification
  • IP verification
  • Phone number verification

In addition, the bank may also decide whether to approve a transaction based on the purchase amount and your prior spending patterns.

What Steps Are Involved in AVS Verification?

When you enter your billing address during checkout and click “Submit,” the following usually happens:

  • The payment gateway sends the address data through the card network (Visa, Mastercard, Discover, or American Express).
  • The card network forwards that information to the card issuer.
  • The issuer compares the address against the address stored for that card number.
  • The issuer sends the authorization status and the associated AVS response code back to your payment gateway.
  • The merchant decides whether to approve the transaction based on that code.

This may sound like a lot of steps, but it is usually completed in just a few seconds. And today, these payment interfaces are already built into the card network and gateway systems, so merchants are mostly just calling the existing tools.

How AVS Works

It Verifies the Numbers

AVS may sound sophisticated, but in reality, it is actually a pretty simple system. Even if you provide your full address, the issuer usually verifies only the numeric parts of the address. In most cases, it compares just the street number and ZIP/postal code. What does that mean? For example:

  • The White House address is: 1600 Pennsylvania Ave NW, Washington, DC 20500
  • In practice, the comparison may only use: 1600 and 20500

That may sound a little simplistic. After all, lots of homes could have a street number of 1600. But ZIP code segmentation already helps narrow that down, since one ZIP code usually covers a relatively limited area. Another reason is that people rarely mistype numbers, while typos in English street names are much more common. Banks generally do not want a small typo to prevent a customer from paying for a purchase. On top of that, some words can be abbreviated, such as apartment/apt, and people may also change the order of address elements. Comparing just the numbers is the fastest approach.

When the issuer cannot get an exact address match, it returns an AVS code indicating how the address verification failed. For example, AVS code A means the address matches but the ZIP/postal code does not.

Returned AVS Codes

Just like chargeback reason codes, each card network has its own system for interpreting the AVS codes returned by the bank.

How Merchants Handle AVS Codes

Merchants can set different rules for different AVS codes. For example, if the address does not match, the order might be sent for manual review. If the customer has shopped with that merchant for a long time and the address has changed, the merchant may call to ask whether the customer has moved. Most merchants have a fraud department dedicated to handling this kind of payment issue.

For example, I once bought a gift card at Saks, and the order stayed pending after I placed it. I contacted online customer service, but they said they could not help because the order was being handled by the fraud department. A few days later, I got a phone call asking why my address was different from the one on previous orders. My personal impression is that department stores tend to be especially cautious, probably because they deal with a lot of credit card fraud. By comparison, Amazon usually seems much more relaxed, even if you keep changing addresses.

If the merchant thinks the risk is too high, you may simply get an “unable to verify your address” message.

A Few Interesting Notes

  • AMEX authorized user cards may not verify the billing address, and sometimes even a random address can go through.
  • On older Amazon accounts, the billing address and even the name can sometimes be a mess. Sometimes people just keep selecting the default option for convenience.
  • Old addresses on credit cards may still work for a while after you move; banks seem to keep your previous addresses on file.
  • Some sites that attract a lot of resellers, such as Nike, Coach factory, Saks, Macy's, NM, and Sephora, seem especially likely to decline international credit cards, possibly because of AVS.

Have you had any experiences with AVS or address verification?