The only constructive way to avoid real scam chargebacks is to stop fraud itself, and Address Verification Service, or AVS, is among the most widely accepted anti-fraud techniques. It works by comparing the address given by the consumer to the address mentioned on file with the card company. with a disparity indicating potential fraud. According to Shufti Pro News, the chargeback ratio is on the rise, especially during the holiday season. This can be effective as the first line of defense against stolen credit cards. But it will not apprehend every scam artist, and using it too strictly may prevent some genuine transactions. How should sellers incorporate AVS into their anti-fraud and chargeback approach?
AVS is a process that compares address details given by the client during money transfer to data on record with the bank. This adds another barrier to scams and identity fraud.
This process was introduced by Mastercard. Although it has long been used by all significant credit card networks, such as Visa, Discover, and American Express. It is almost always utilized in card-not-present money transfers these days, such as self-service petrol stations and online shopping.
Consumers and sellers are used to varying angles of AVS matching. We’re used to putting our complete billing address when shopping online, but the filling station only accepts our ZIP code. Who makes the decision about how much of an address must be verified? But even though banks and other financial institutions may attempt to sway matters in a “safer” direction by charging higher service charges for unconfirmed transactions, the merchant is ultimately responsible.
If you have a higher percentage of chargebacks due to real theft. it’s worth looking at how one AVS is configured to check if it is staying one step ahead in filtering out the fraudsters and illicit practices.
How Does AVS Operate?
When a payment is given permission, the Address Verification System is stimulated. The creditor enters an address into the seller’s payment platform. And AVS matches up the numeric components of the address, road or street number, and ZIP or area code to the address mentioned, generating a code. This code implies whether a partial or full match exists. Or if a comparison is impossible caused by a lack of assistance from the card issuer or another error.
This code can later be used by the seller to determine whether or not to move ahead with the money transfer. Typically, this choice is made automatically based on the regulations that the seller has set up in their payment platform. Because AVS isn’t commonly accessible from outside The US, Canada, and the United Kingdom, sellers with a large number of multinational customers may also want to enable the response code indicating no AVS assistance from the issuing company. This process takes place during standard verification communications and has no effect on successful transactions.
Benefits of AVS
What AVS excels at is detecting a “classical” credit card scam, for instance, a scam artist who has stolen another person’s physical payment card or kept a copy of the recognizable card details, such as the customer’s name, number on the card, and expiry date.
Most of the time, the scammer has no clue what the card owner’s billing details are. They may well be able to predict the ZIP code, but there’s a tiny possibility they’ll get the road or street number correct. AVS will return a failure code, the seller will deny the transaction, and fraud-related crime will be avoided.
Does AVS Restrict the Use of Real Customers?
The vast majority of consumers will never get a problem with AVS. If they input their address inaccurately and the payment is refused, the seller can easily allow them to resolve their mistake and try once more. However, based on how stringent your payment gateway’s configurations are, some valid customers may be unable to bypass AVS:
- They are unsure of their address details. Perhaps they registered for the card with an old address a while ago and didn’t use it till now. Before moving forward, they must resolve this issue with their bank first.
- Their bank does not accept AVS. This could be an issue for a large number of international users or clients who use pre-paid debit cards. You can change your AVS configuration to enable the response message that is prompting these clients to be rejected.
AVS is just one of several techniques in your repertoire to combat fraud. It cannot be relied on to detect intelligent types of fraud, but with the proper configurations, it can successfully point out low-effort bad actors.
AVS works best when combined with other fraud prevention techniques like IP address validation, fingerprints, and 3-D Secure. The more strands of defense you have in place. The less likely it is that disclosed fraud efforts will contain all of the essential knowledge to accomplish.