As merchants managing merchants, we often receive questions regarding credit card industry standards and practices, and so have decided to spend a few blog entries providing some basic education, tips, and money saving tricks. This issue will focus on the Address Verification System, known as AVS.
Simply put, the Address Verification System (AVS) is a system used to verify the identity of the person claiming to own a credit card, by comparing the billing address provided with the address on file at the credit card company. Specifically, the digits of the street, and the zip code (optionally including the zip+4 code) are checked. All other information, such as the name on the credit card, the street name, city, state, are completely ignored.
At present, Visa, MasterCard, and American Express support AVS only in the USA, Canada, and the United Kingdom. Unfortunately, not all banks support AVS which is why you will often receive a decline with the reason "This transaction has been declined" instead of a more useful message such as "Address mismatch".
The AuthorizeNet gateway, which all Billing Circle clients are required to use, supports special security options which allow you to decline credit cards for any combination of AVS code responses. For some businesses, this can be a fantastic security measure, weeding out potential fraud, while for others, this simply gets in the way of business. It is completely up to the merchant to decide how much potential-fraud security they wish to have in place. To access these settings, log into your AuthorizeNet account, click "Account", then "Address Verification Service" under the "Security Settings" area. Check the boxes for any AVS mismatches you wish to decline. If you have absolute trust in your customers, or wish to handle declines on a customer-by-customer basis, uncheck all the boxes.
For those who ship physical products to customers, AVS is the absolute most valuable fraud prevention service available. Testing for fraud is simple: First off, does the billing address match the credit card (with a good AVS code such as 'Y')? Secondly, does the shipping address match the billing address? If the AVS is clean, and the billing and shipping match, it is pretty safe to assume the card is legitemate, and not fraudulent. If somebody has a good AVS code, however the billing and shipping do not match, it could very well be a stolen credit card, shipping to the thief. Or if the billing and shipping DO match, however the AVS is bad, it could still be a stolen card, however the thief does not know the card's billing information.
We leave this up to the merchant to determine what level of security they require, however it never hurts to arm yourself with the knowledge of the tools available.
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