AVS (Address Verification Service)

Address Verification Service (AVS) is a tool provided by major credit card companies that intends to limit fraud by comparing the billing address
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Address Verification Service (AVS)

Address Verification Service (AVS) is a tool provided by major credit card companies that intends to limit fraud by comparing the billing address, or some portion of the address, provided by the card user with the address on file at the card issuing bank. 

This system is often used in conjunction with other fraud detection tools and can limit chargebacks that stem from fraudulent activity.

How Does AVS Work?

AVS occurs during the authorization; the first step of credit card processing. 

Let’s say a customer is making a purchase online using a card. The gateway will require the customer to enter their billing information before submitting the order. 

When the order is placed, the system then transmits this information to the card issuing bank which provides an AVS code depending on the level of matching. 

If the address information provided matches what is on file, a code is issued and the transaction is authorized. This is assuming of course that other factors are confirmed like the card having adequate funds to complete the transaction. 

If all matches, a ‘Y’ code is issued by the AVS, the transaction proceeds as expected and cardholders or merchants may not be aware this is happening behind the scenes. 

What if There is a Mismatch? 

If the information provided does not match what is on file, an AVS code will be issued that gives a reason why and the transaction will not be authorized. 

The reasons can vary but some are:

  • Street address matches, zip code does not
  • Street address and zip code do not match
  • Zip code matches, street address does not

For a full list of codes, check out this chart. 

This can happen frequently especially in ecommerce transactions if a customer misenters their billing information. The customer can correct the information and resubmit the transaction. 

What Does AVS Cost? 

Like other fees in credit card processing, the cost of AVS varies by your payment processor. 

The fee for this service could be a few cents per transaction or could only apply to certain sales. It is also possible for an AVS fee to be quoted by a processor but then waived if most of the transactions being completed by the merchant are happening online. 

Certain card issuers, like MasterCard in particular, charge an automatic AVS Assessment Fee per transaction that is independent of your credit card processor. 


There are shortfalls associated with AVS. Of course, an obvious one is if the card information has been compromised, the thief who stole the credit card number may also have obtained the billing information. He/she would easily be able to process the transaction and avoid detection.

Sometimes, the system gets triggered inadvertently if a customer has failed to update their billing address after a move or simply has the wrong mailing address on file with their card issuer. If a customer has their transaction fail, they may be unlikely to reattempt the purchase and you may lose out on the sale.

Recent studies have shown that up to 33% of customers may abandon a purchase after a false decline. 

Best Practices

Address Verification Service is a layer of security that merchants can use when processing credit card payments. It is not foolproof, however, so merchants should discuss available options with their credit card processing company.

Usually, AVS is used in conjunction with other measures that limit fraud including CVV, IP address confirmation, device authentication, or even biometric analysis. As online sales become increasingly common, security measures will certainly continue to evolve as well. 

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