What is Address Verification Service (AVS)

what is address verification service

What is an Address Verification Service

Accepting online transactions bring in bigger opportunities for small and new businesses. It attracts more customers due to its convenience and secured payments. Using an internet merchant account or payment gateway can cost more, but the revenue growth more than makes up for it. With all these fees you have to pay, there's one feature you're probably not that familiar with. Merchants who have opted for more risk management features can check their payment processing contract, and see the AVS or Address Verification Services in it.

Let’s get to know what AVS is, and how it helps you and your customers when it comes to online payments?

What is AVS or Address Verification Services?

AVS is a fraud system that double-checks the billing address given by the customer. It is compared with the information saved in the bank's database.

Why do you need to do these things when transacting with your customers? The AVS helps in minimizing fraud by confirming that the card user is indeed the owner and avoiding possible chargebacks. It provides additional information to help confirm cardholder identity.

There's always new types of CNP or Card Not Present fraud coming out. The biggest risk, of course, is due to the lack of physical verification in online transactions. Originally, the AVS was provided by MasterCard, but it's now been adopted by almost all credit card companies worldwide.

There are a lot of reliable address verification service providers that come with their own risk management combinations, so choose one that works well for your business. There are different pricing plans for these types of packages as well. There’s the tiered pricing plan, interchange-plus pricing plan, or subscription-based pricing, depending on the kind of business you have.

The AVS assessment fee per transaction is usually at $0.01 for card-not-present or CNP transactions, and $0.005 for physical credit card transactions. The processor pays this fee to MasterCard automatically.

How does Address Verification Service work?

Since most online stores are CNP, it's a must to add more risk management features on your payment page to avoid fraud and phishing. The AVS process starts when a transaction submits information to the card-issuing bank and is checked if the billing address obtained matched. It will submit information through codes and will eventually tell you if it matched accurately, partially, or did not match at all.

Why is this important if you're in a business that does not handle these kinds of problems? This service avoids chargebacks when there's suspicion of fraud. Through AVS, you can contest the customer dispute. It's easier to fight chargebacks when there's an attempt or successful AVS process during the transaction.

However, the AVS alone does not guarantee zero scam and fraud. It's likely to get fraudulent purchases even with a matching billing address saved in the bank. What AVS does is it increases both merchant and customer protection as the online payment process asks the customer to enter other personal verification, such as a CVV or Card Verification Value, and 3D Secure.

If you sell globally, make sure that your payment gateway can handle international AVS. This is to ensure that the information you have is accurate and safe. Most CNP frauds are done by customers with an international address who order in large multiple items, as it's more challenging to verify if the address is accurate.

AVS can also be set up to run automatically through a payment gateway or a virtual terminal. Sometimes, you can also manually check it yourself through the physical credit card terminal.

Who commonly uses Address Verification Services?

Online merchants commonly use this, since the chances of fraud are significantly higher than the brick and mortar stores. However, modern businesses use this nifty service to avoid extra expenses and to confidently approve transactions. AVS became a new line of defense for merchants.

It's rare for retail businesses to have AVS available in their stores since there’s much less risk of fraud and easier verification for card-present transactions. If you handle a lot of B2B or Business to Business orders, however, you will need AVS to complete some orders as the credit card data commonly used to pay this is Level II to Level III.

What are the codes for Address Verification Services?

When the AVS checks if AVS rejected or positive AVS, there are codes that are reported back, each with unique meanings that would determine the status of the billing address provided and registered in credit card issuing bank. Here are some of the commonly used codes you can acquaint yourself with:

AVS Code


B No address was submitted, AVS is unnecessary.
E AVS is not allowed for the card used in the purchase.
R AVS was unavailable during the transaction, needs to be retried.
G Credit card issuing bank is not an American bank so it cannot perform AVS.
U Address information was unavailable for the card used in the purchase.
S American card issuing bank does not support AVS, so it cannot perform AVS.
N The street address and the 5-digit ZIP code provided did not match the information in the issuing bank.
A The street address matched, but the 5-digit ZIP code did not match.
Z The first 5-digit ZIP code matched, but the street address did not match.
W 9-digit ZIP code matched, but street address did not match.
Y Both ZIP code and street address matched perfectly.

What is AVS Mismatch, and Rejected?

When pulling up information and comparing the billing address given by the customer to the one the card-issuing bank has, there will be various codes (as shown above) to indicate what happened. The reason why you run AVS is to ensure that the billing address is accurate, so when it shows AVS Mismatch, it means that neither the ZIP code nor the street address matched with the information in the customer's card issuing bank.

If ever the card actually belongs to the user, they should have it fixed with just a short call with their bank. However, when AVS can't confirm and check with your bank regarding the status of your billing address, it shows Gateway Error: AVS Rejected. This would mean that the customers have to go to the bank and fix their billing address, or confirm it and try again.

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