What is Address Verification Service (AVS)?
Address Verification Service refers to a fraud prevention tool used during card not present transactions such as online payments. The system checks whether the billing address entered during a payment matches the address linked to the cardholder account at the issuing bank.
How does AVS work?
AVS operates during the payment authorisation process. The customer enters billing address details during checkout. The merchant sends this information alongside the transaction request to the card issuer. The issuing bank compares the address data with its records and returns an AVS response code which indicates whether the details match.
What information does AVS check?
AVS usually compares two key address components:
1. Street number
2. Postal or ZIP code
Some issuers support additional address matching fields, although these two elements represent the most common checks used in payment authorisation.
Why do merchants use AVS?
Merchants use AVS to reduce fraud in card not present transactions such as ecommerce payments. When billing address details do not match the issuer records, the merchant receives a signal which indicates higher fraud risk. Merchants use this signal to decline the transaction or request additional verification.
Does AVS prevent all card fraud?
AVS reduces fraud risk although full prevention does not exist. Fraudsters sometimes possess correct billing addresses, especially in cases involving data breaches. AVS also operates mainly in the United States and selected regions, which limits effectiveness in some international transactions. For this reason, merchants combine AVS with other fraud prevention tools such as CVV verification and behavioural risk analysis.