Address Verification Service (AVS) - Definition

What is Address Verification Service (AVS)?

Understanding Address Verification Service (AVS) in E-commerce

Quick Definition

Address Verification Service (AVS) is a fraud prevention tool used by payment processors to validate the billing address provided during credit card transactions. It compares the customer's submitted address with the address on file at the card-issuing bank, helping merchants reduce fraudulent transactions and chargebacks by confirming address accuracy.

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Understanding Address Verification Service (AVS)

How AVS Works

Transaction Flow

1.Customer enters billing address during checkout
2.Payment processor sends address to card-issuing bank
3.Bank compares submitted address with records
4.Returns matching result to merchant

Matching Codes

Y	Street address and ZIP match
Z	ZIP matches, street address does not
N	Neither address nor ZIP match
U	Unable to verify address

Benefits of AVS

Fraud Prevention

Reduces risk of unauthorized transactions by verifying customer identity

Chargeback Reduction

Provides additional layer of protection against fraudulent purchases

Risk Management

Allows merchants to set custom rules for transaction acceptance

Cost Savings

Minimizes financial losses from fraudulent transactions

Limitations to Consider

⚠️Not 100% Foolproof: Can't completely eliminate all fraudulent transactions
⚠️International Challenges: Less effective for cross-border transactions
⚠️False Positives: May incorrectly decline legitimate transactions

AVS in Modern E-commerce

While AVS is crucial, modern merchants need multi-layered fraud prevention strategies. Tools like Growth Suite complement AVS by providing additional visitor behavior tracking and purchase intent analysis, offering a more comprehensive approach to transaction security.

The key is balancing fraud prevention with smooth customer experience, ensuring legitimate customers aren't unnecessarily blocked while protecting against potential fraudulent activities.