Credit Card Processing, Security and PCI Compliance

Address Verification Service (AVS)


January 14, 2023

Address Verification Service (often referred to as AVS and sometimes Address Validation) is an anti-fraud tool offered by credit card processing companies. The tool works by comparing name and address information given by the person claiming to own the credit card to the name and address on file with the credit card company.

When is AVS used?

Address Verification is used in all kinds of credit card scenarios. It’s common in ecommerce and other card-not-present transactions, as those transactions have fewer alternative means of verifying a cardholder’s identity. But AVS can be used in person, too.

AVS is also one component in qualifying for enhanced data (level II and level III) transactions, such as those involving corporate or government cards.

Reasons to Use AVS

Aside from acting as a fraud deterrent, saving you the hassles of processing a fraudulent transaction and dealing with the repercussions of that, one of the biggest reasons to use the Address Verification Service is that it’s part of the required qualifications for lower cost interchange categories. That means that if you don’t use it, your transactions will downgrade, and not be eligible for the lowest possible processing costs. Skip down to “Is using AVS worth the cost?” for more information on downgrades.

Chargeback Defense

For ecommerce businesses, using AVS strategically may help you defend against chargebacks. In Visa’s merchant guide to chargebacks, the company indicates that you’ll be in a better position for defending chargebacks if you used AVS and received a “Code Y: street address and 5-digit zip code match” notification. Additional requirements (such as signed proof of delivery) still apply, but AVS can add a layer of authentication to your chargeback dispute.

When combined with signature upon delivery, AVS can make a strong case in a “friendly fraud” chargeback situation.

Declining Transactions Based on AVS Result

Payment gateways, for accepting credit cards online, often allow you to set AVS filters to automatically reject transactions if they return AVS results of non-matching information. W

hile you aren’t required to decline transactions based on the AVS result, it’s a good idea to look into the transaction further if you receive a mismatch. Popular payment gateway Authorize.Net suggests at a bare minimum that you exclude transactions that return an AVS code of N: neither street address nor zip code match.

By contrast, code Y (street address and 5-digit zip code match) indicates transactions that are more likely to be legitimate.

What does it cost to use AVS?

Like everything in credit card processing, the answer to this question is: It varies.

Processors can choose whether or not to apply a per-transaction fee for AVS. Typical fees range from 1 cent to 10 cents per transaction verified with AVS, but that isn’t set in stone. Further, processors can choose to apply the AVS fee to only certain transactions. It’s not uncommon for an AVS fee to be quoted, but waived if a majority of the business’s transactions are e-commerce (card-not-present).

However, Mastercard charges a very small assessment fee for AVS transactions, which is non-negotiable if you use AVS. Your processor does not have control over assessment fees.

Is using AVS worth the cost?

This is one situation where the answer is a definite yes.

The costs to use AVS are generally quite low, but address verification is one of the qualifying factors for lower priced interchange categories. If you don’t use AVS, your transactions can be subjected to credit card processing downgrades and get routed into a more expensive category, costing you significantly more per transaction than the nominal AVS fees.

Aside from that, it helps fight fraud and is a good piece of evidence to have to fight chargebacks.

AVS Codes

When you use AVS, you’ll see a code with the result of the verification. There are multiple alphabetic codes that the Address Verification Service may show, as follows:

Visa, Mastercard, and Discover

A – Street address matches, but zip code doesn’t match.
       *For Discover cards only, code A indicates that Address and 5-digit zip code match.

B – Street address matches, but zip code could not be verified.

C – Neither street address nor zip code match.

D – Both street address and zip code match. (Also applies to code M.)

E – AVS data is invalid or not allowed for the card type.

G – Non-US-based issuing bank, does not support Address Verification.

I – Address could not be verified.

M – Street address and zip code match. (Same as code D.)

N – Street address and zip code do not match.

P – Zip code matches, but street address couldn’t be verified.

R – System unavailable.

S – US bank that doesn’t support address verification.

U – Address information unavailable. (In cases of a US bank that doesn’t support AVS for a non-US verification, or if the AVS in a US bank isn’t functioning correctly.)

W – Street address doesn’t match, but 9-digit postal code matches.

X – Street address and 9-digit zip code match.

Y – Street address and 5-digit zip code match.
      *For Discover cards only, code Y means address only matches.

Z – Street address doesn’t match, but 5-digit zip code matches.

American Express

F – Cardholder’s name doesn’t match, but billing zip code matches.

H – Cardholder’s name doesn’t match, but street address and zip code match.

J – Cardholder’s name, billing address, and zip code match.

K – Cardholder’s name matches, but billing address and billing zip code don’t match.

L – Cardholder’s name and billing zip code match, but billing address doesn’t match.

O – Cardholder’s name and billing address match, but billing zip code doesn’t match.

Q – Cardholder’s name, billing address, and zip code match.

T – Cardholder’s name doesn’t match, but street address matches.

V – Cardholder’s name, billing address, and billing zip code match.

Whether you choose to implement automatic rejections for certain codes or manually review the details, using AVS can help prevent fraudulent transactions and expensive downgrades.

Ben Dwyer

BY Ben Dwyer

Ben Dwyer began his career in the processing industry in 2003 on the sales floor for a Connecticut‐based processor. As he learned more about the inner‐workings of the industry, rampant unethical practices, and lack of assistance available to businesses, he cut ties with his employer and started a blog where he could post accurate information about credit card processing. As the blog gained in popularity, Ben began directly assisting merchants in their search for a processor. Ben believes in empowering businesses by providing access to fair, competitive pricing, accurate information, and continued support. His dedication to transparency and education has made CardFellow a staunch small business advocate in the credit card processing industry.

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