What is credit card address verification? -- Merchants that accepts credit cards--whether in a store, on the phone, mail orders or on the Internet--risks a certain degree of fraud. There is nothing new about stolen credit cards, stolen credit card numbers, fake credit cards and numbers and so on. Mechanisms have developed to protect mail order/telephone order and internet merchants that need to deal with "credit card not present" transactions.

The address verification service (AVS) provided as part of the standard "card-swipe" process and, more recently, embedded holograms, and on-card photos have all been deployed overtime to help manage physical world credit card fraud. The Internet, introduces a whole new level of risk, because the credit card is not present.

On the Internet, it is too easy for guilty consumers to hide behind an assumed or stolen identity when using a credit card that doesn't belong to them.

Numerous features of each credit card transaction, including: name, billing address, zip code, and shipping address are verified against the V/MC billing information of the credit card holder when using the credit card Address Verification Service (AVS).

As any merchant can certify, the boldness of thieves intensifies when the face-to-face element is removed. You can be dealing with anyone. In addition, AVS does not apply to international orders, due to language differences, which for many Web businesses constitutes a large percentage of the transaction volume. International Orders need to be verified by faxing the credit card slip to the consumers and having a signature faxed-back to actually verify the order. The best way to deal with International Orders is by receiving a check in the mail. There are lots of frauds in dealing with International Orders. The actual credit card holder can scream fraud, just to keep the merchandise and not pay for it. This is common practice. Beware when dealing with International orders. Many companies have stopped taking International credit card orders for this very reason.

AVS will verify if the address given by the cardholder actually matches their billing address when they applied for the credit card. When these don't match this sends a flag to the merchant to implement more safeguards to ensure they aren't being ripped off.

Who loses? No matter who perpetrates credit card fraud, the merchant is the big loser. While consumers are provided with a certain degree of protection if their credit card numbers are stolen and misused, Internet merchants are fully liable for all transactions because Internet transactions are classified as "card-not-present." As a result, each fraudulent credit card transaction usually results in a chargeback. A charge back is a forced refund to the customer via the merchants bank account. Merchants new to the Internet often begin by accepting fraud and the resulting chargebacks as part of the price of doing business. Then they regret this after they end up terminated by their bank for too many charge backs.

Credit card associations penalize merchant banks for charge backs. Naturally, the bank passes the fines on to responsible merchant, and these penalties can be severe. Therefore, performing AVS on all transactions greatly reduces a merchants exposure to risk.

The entire process of performing credit card AVS is completely transparent to the consumer. Declines can be handled politely to keep the door open to legitimate orders by displaying a message similar to: "We are unable to process your credit card payment at this time. If you still wish to purchase this product or service, please call us at 1-800.". At this time the merchant can obtain more information from the customer to verify why the address didn't match such as recently moved, city changed zip codes, etc. The merchant can also ensure their product is shipped via registered mail with a return signed receipt to ensure it was received by the proper person.