What is User Experience? A Detailed Guide about UX

What are Address Verification Services?

In the last couple of decades, digital technologies have disrupted the way things used to get done. All of our lives have been impacted by the advent of digital technologies. Remember the times when paper currencies were the only ones in circulation!

With digitalization happening at a global scale, most financial transactions have been moved to digital mode since then, to increase transparency in the system and reduce frauds of all kinds. But that has not stopped the scammers and fraudsters from continuing to do what they do, albeit a drastic reduction was achieved through the digitalization of financial transactions. Still, a lot of work needs to be done to make the system more robust and secure so that you, as well as the buyers on your site, are protected from getting cheated out of their hard-earned money.

Address verification service is one such technology that is being used to make online transactions more secure and less prone to fraud. As we have seen over the years in the consumer market, credit and debit cards have emerged as the most preferred choice to conduct any digital financial transaction.

If you have an online business that accepts credit or debit card payment methods, how do you ensure that the consumer order is legitimate and that the card payment will get realized and you won’t end up getting cheated? Also, how do you ensure that the consumer, who trusts your portal with their confidential payment data, won’t end up getting defrauded? As the name suggests, Address Verification Service is essentially a method to verify the address provided by the buyer on your site on your portal to the address registered by them with their credit or debit card service provider. This method is one of the many verification processes that you should implement to ensure that the transaction is secure, and there is no fraud.

The technology is still getting adopted on a global scale, and the address verification service API is currently available in the United States, Canada, and the United Kingdom. Let us understand how it works.

  • The buyer on your site enters their address details during the ordering process on your portal.
  • The buyer on your site reaches the payment page and enters their credit card details
  • Your payment portal transfers the data to the customer’s credit card service provider like Amex, Visa, MasterCard, or Discover.
  • The credit card service provider then shares these details with the banking partner.
  • The bank does a postal address verification. It goes through the record it has maintained for your customer and then compares it with the data it has received from the payment portal on your site.
  • The bank’s network then reverts with the status of authorization. It also shares the relevant AVS code in their revert to your payment portal.
  • Based on the code received, you choose whether to accept the order.
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The Address Verification Process

Now, you should understand how the address is verified to make an informed decision on how to use the AVS. The buyer on your site always enters their full address into your portal during the ordering process. So, how is this address verified using AVS? Is the entire address checked? Is it a free address verification process?

In this methodology, primarily, the number of components of an address is verified. This means that mainly your customer’s postal and house numbers are going to be checked. Hence, the success rate of the entire verification process depends on whether the customer has entered the correct data, whether their bank records are updated, or they have a proper house or apartment number. The AVS codes that are reverted to your payment portal is an indication of how much or which parameters of the address are a match.

Generally, the AVS codes are defined by each credit card service provider as per their internal system. To add to the code definition, the code interpretation also varies from one card service provider to the other. This implies that for the same AVS code, different card service providers will have a different meaning. The best way to avoid any confusion regarding the interpretation is to understand the documents and terms of each service provider thoroughly. Let us take a few instances to understand this:

AVS Code Y - Whenever your payment portal received the code Y, it could mean:

  • If it’s a Visa Card, then there is a match in regards to both address and zip code
  • If it’s a MasterCard, then there is a match in regards to both address and zip code
  • If it’s a Discover Card, then there is a match in regards to the address alone
  • If it’s an American Express Card, then there is a match in regards to both address and zip code

AVS Code N - Whenever your payment portal received the code Y, it means that neither of the addresses or zip codes has matched, irrespective of the card service provider.

It is pertinent to understand that you can’t be too rigorous with the AVS process nor too lenient about it. You just have to find the right balance. With professional security service providers available in the market, you can take their support to set up the system in such a way that best suits your business by ensuring that it stops fraud from taking place but does not become too rigid that even genuine transactions end up getting rejected.

You must understand that the AVS technology is not meant to be a full-proof fraud detection system on its own. You have to use it with other security technologies like card verification value, secure IP address check, 3D Secure, device verification, etc.

You need to ensure that the Payment Card Industry Data Security Standards have complied. In the event of AVS codes reporting any mismatches, you can always get the mismatches verified with your customer directly and check for yourself if the transaction is legitimate. In a nutshell, for the sake of ensuring business and mitigating fraud risks, you should use a multi-dimensional approach.

AVS technology is one of the most reliable approaches you can take, but it should not be used alone. It should be used in conjunction with other fraud detectors so that you can take an informed decision about what is best for your business.