Merchant Glossary: AVS / Address Verification Service

AVS stands for the Address Verification Service. AVS is a service that is required to be used on all card not present (keyed) credit card transactions. AVS works by the merchant entering the street address and zip code at the time of transaction, along with the card number, expiration date, and amount. When a transaction is submitted for authorization, the address and zip code entered are checked against the actual billing address and zip code for the card holder. The AVS response is actually provided by the issuing bank. The result is either a match, partial match, no match, or AVS not available or error. Depending on the AVS response, the merchant can use the information for fraud control. For example, if shipping an expensive electronic item the address and zip code do not match, it would be prudent for the merchant to not ship the item without contacting the card holder. This will save and or reduce a potential chargeback. There is a small cost for the AVS service, but it is usually incorporated into the transaction fee. AVS is a great tool and should be used by all merchants accepting Internet credit card orders or anytime the card is not present, as it will help reduce the risk of a transaction going bad.

Other terms explained in the Merchant Glossary: