How Does AVS Work?ĪVS is activated when the transaction is being authorized. If you’re dealing with a high rate of chargebacks resulting from true fraud, it’s worth taking a look at how your AVS is set up to see if it could be doing a better job of filtering out the fraudsters. Who decides how much address needs to be verified? The merchant-although the banks may try to influence things in a “safer” direction with higher processing fees for unverified transactions. We’re used to entering our full billing address at the online store, but the gas pump just gets our ZIP code. Merchants and customers are quite accustomed to various degrees of AVS matching. These days it's almost always used in card-not-present transactions such as self-serve gas pumps and online purchases. This system was initially developed by Mastercard, but has long been in place with all of the major credit card networks, including Visa, American Express, and Discover. This adds an additional obstacle to fraud and identity theft. How should merchants use AVS in their strategy to fight fraud and chargebacks? What is AVS? AVS is a system that checks address information provided by the customer during a transaction with information on file with the bank. This can work well as a front line defense against stolen cards, but it won’t catch every fraudster, and using it too restrictively could block out some legitimate transactions. It works by matching the address provided by the customer against the cardholder’s address on file with the card issuer, where a discrepancy would indicate possible fraud. The only effective way to stop true fraud chargebacks is to prevent fraud in the first place, and one of the most often recommended anti-fraud tools is Address Verification Service, or AVS. What are AVS's Strengths and Weaknesses?.
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