Home » How the Address Verification System (AVS) Works

The Address Verification System (AVS) is a system used by financial institutions, sponsoring banks, and payment processors to help prevent fraudulent credit and debit card purchases. When Card Not Present Transactions are processed through the payment gateway, the issuing bank will request the billing address of the cardholder. This information is typically stored on the magnetic strip located on the back of a credit card. The bank will match this information against the address on their system. If it does not match, then the transaction will be flagged with a certain code. The address verification system helps a business owner decline the card.

What is AVS Payment Processing? 

 The best way to explain how it works is by using an example.

Amazon’s payment gateway sends address information to a customer’s card e.g. MasterCard, Visa, American Express, or Discover.

The branded card sends the information to the issuing bank and the issuer compares the address with the address on file.

If the information is correct, the issuing bank forwards an authenticated status and associated AVS payment processing code to Amazon’s gateway.

AVS Check: How a Credit Card Address is Verified

An AVS check authorizes the digits in a billing address along with the card address on file to confirm if a cardholder is genuine and is actually the one making a purchase.

AVS checks through mismatch filters flag down suspicious behavior and nip fraudulent activities in the bud.

However, they also increase the likelihood of stopping some legitimate purchases going through by the payment processor. Address verification system filters are extremely sensitive with complicated features that vary from card type to issuer.

For a card not present transaction request to be completed, an issuer has to go through a cardholder’s file and verify the order details against the payment details.

Once the transaction is in full flow, the merchant gets an AVS code indicating the match type.

This AVS check determines the level of risk associated with each transaction. It is up to the merchant to choose which ones they want to accept or reject.

AVS Credit Card Processing: Fixing an AVS Mismatch Problem

Here is an AVS credit card processing solution for merchants with mismatch problems. When an AVS mismatch occurs and a merchant recognizes the cardholder as a repeat customer, the merchant should allow the transaction to proceed.

However, if it is a new customer, the merchant should reach out immediately by phone or email and give a reason why the transaction was stopped.

This step helps to remedy the situation quickly without the risk of having to lose a valuable customer.

Alternatively, a merchant  use the following solutions when AVS credit card processing problems occur:

• Start the process all over again
• Overrule the payment system
• Cancel the transaction
• Approve the transaction

Choosing any one of these options depends on how well you manage risks or trust a customer. Whenever in doubt, a merchant should always call the customer or sponsoring bank to verify the information.

It could just be that the customer entered the wrong information or has not updated the card address on file after moving to a new state or residence.

AVS Codes You May See from Time to Time

The following are the most common AVS codes used by sponsoring banks and payment processors for Card Not Present Transactions that a merchant account owner will see when processing a credit card transaction:
X = Match: The exact street address and the 9-digit zip code both match what the bank has on file. (Used by Mastercard).

Y = Match: The exact street address and the 5-digit zip code both match what the bank has on file. (Used by Visa, Mastercard, Amex and Discover).
A = Partial Match: The exact street address matches but the 5-digit zip code or the 9-digit zip code does not match what the bank has on file. (Used by Visa, Mastercard, Amex and Discover).

W = Partial Match: The street address does not match, but the 9-digit zip code matches what the bank has on file. (Used by Mastercard and Discover Card).

Z = Partial Match: The street address does not match, but the 5-digit zip code matches what the bank has on file. (Used by Visa, Mastercard, Amex and Discover).

N = No Match: The exact street address and the 9-digit or 5-digit zip code does not match anything that the bank has on file. (Used by Visa, Mastercard, Amex and Discover).

U = System is Unavailable: The Address Verification System is unavailable or not functioning. (Used by Visa, Mastercard, Amex and Discover).

R = System is Unavailable: The issuer’s system is unavailable or it has timed out. The AVS codes are usually sent from the issuing bank when they are having trouble with the verification system. (Used by Visa, Mastercard and American Express.)

E = Invalid: The Address Verification System data is completely invalid. (Typically only used by Visa).

S or G = Not Supported: The issuing bank does not support the Address Verification System (Used by Visa, Mastercard and Amex).

AVS Code: What Every Address Verification Match Means?

When card not present transactions are flagged because there is a problem with the Address Verification System, a merchant account owner can still proceed to process the credit card transaction. Some codes present a much bigger risk when ignored than others. Make sure you understand these codes in detail when dealing with your payment processor and sponsoring bank.

Exact Match (Code: X,Y). This means that the address on the credit card matches everything on file with the Address Verification System (AVS). It is important to note that Address Verification System is just one security component that is checked during the transaction. If the rest of the security features are an exact match as well (i.e. CCV code) then we recommend that you proceed with the transaction.
If there is any other mismatched information, but the Address Verification System (AVS) is not flagged, we still recommend that you are cautious. The best case scenario is that the credit card goes through and passes all security checks.

Partial Match (Code A, W, and Z). A partial match does not necessarily mean you should reject the transaction. However, you should be very cautious if the address matches, but the zip code does not match what is on file. If you receive an AVS code like this, then we recommend that you consider other possible signs or behaviors that suggest fraud such as:

• A customer who is making a purchase without caring about the purchase.
• A customer who is placing large orders or purchasing a large item but refuses delivery.
• The customer takes time to slowly sign a receipt, which could be an indication of a forged signature. Make sure your employee’s know that they have the right to verify signatures on the back of the credit card or driver’s license.

No match (N). This code can be a huge red flag for card not present transactions. We high recommend that you do not process the credit card if the Address Verification System (AVS) indicates that the address and zip code do not match the information that the sponsoring bank has on file. We have experienced situations where the card holder has just moved and has not yet made the change with their issuing bank. However, this information can easily be checked by your payment processor before you run the transaction.

Unavailable or not supported (e.g. U, R, E, S). If you receive an “unavailable code” or a “not supported” code, it is typically a problem with the system. That means that you will need to use other methods to verify that the credit card transaction is not fraudulent.

How to Configure Your Merchant Account for the Address Verification System?

Configuring the payment processor’s Address Verification System for card not present transactions is typically done through settings on your payment gateway.

If you are using SecureGlobalPay’s payment gateway, you will need to do the following:

• Log into your payment gateway account
• Go to “Options” and click on “Settings”
• Scroll down until you see “Security Options” and the “Address Verification” Link
• Select the check box(es) next to the AVS codes for which the payment gateway should reject transactions.

Once you reach this page you will be able to customize the conditions that will allow a transaction to be accepted or flagged. You can set the Address Verification feature to work for US/Domestic transactions as well as Non-US International transactions. You will have the option to do the following:

Reject a U.S. Transaction If:

• Address information is not provided for AVS Check (Code: B)
• AVS Error (Code: E)
• Non US Card Issuing Bank (Code: G)
• Retry, system is unavailable (Code: R)
• AVS is not supported by card issuing bank (Code: S)
• Address information for cardholder is unavailable (Code: U)

Street Address Matches and

• First 5 digits of Zip Code Match (Code: Y)
• First 5 digits of ZIP Code Do NOT Match (Code: A)

Street Address Does Not Match and

• 9 digits of Zip Code Match (Code: W)
• First 5 digits of Zip Code Match (Code: Z)
• First 5 digits of ZIP Code Do NOT Match (Code: N)

If your payment gateway is run through SecureGlobalPay’s Secure Payment Gateway, we recommend the following:

• Log into the Merchant Interface.
• Click Account from the main toolbar.
• Select Settings.
• Click Address Verification Service in the Security Settings section.
• Select the check box(es) next to the AVS codes for which the payment gateway should reject transactions.
• Click Submit.

We highly recommend that use the Address Verification Service to help prevent fraudulent charges. These tools that tie into your payment gateway and connect both with the sponsoring bank and payment service provider are not only recommended but a must when accepting card not present transactions. If the you or your employees are suspicious about a card or a cardholder at any time during the transaction, you can contact an authorization center directly and manually confirm the credit card information at any time, without hesitation.

What Does Address Verification Service Rejection Mean?

An AVS rejection is totally dependent on the level of risk associated with a transaction. An AVS rejection checklist helps a merchant maintain a positive partnership with the sponsoring bank and payment processors to help control their various levels of risk.

An AVS rejection checklist is usually suggested because of the following reasons:

• Street address not provided or verified (no match)
• Postal code not provided or verified ( no match)
• Issuing bank does not support AVS
• Issuing bank has AVS system error (does not support AVE)