Address Validation and Credit Card AVS

Address validation services. Address verification services. Two very similar-sounding terms, with identical acronyms but totally different meanings. If your business is involved in selling online, the explosive growth of e-commerce during this year’s pandemic makes these differences more important than ever.

A little over a year ago, we explored the differences between these two forms of AVS in this article. Here, we want to revisit the importance of both of them in this new retail environment.

Knowing your AVSs

First, address validation involves making sure an address is correct – in other words, the address entered is accurate, deliverable, and complete. An address validation service will compare an input address against authoritative sources such as the USPS address database and other data to ensure its accuracy, and append and correct it as needed.

Here is an example of how it works:

When your customer submits their address during checkout, you can:

1. Using a real-time API, send the address data to the validation service. The address is validated and returned in a standardized address format.
2. If there were issues with the address, the suggested corrections are returned and presented to the customer for confirmation. (e.g. “Did you mean?”)
3. The validated address is then stored in the customer profile and ready for the credit card’s AVS check.

Address verification (AVS) is an important part of the credit card acceptance process. An address verification service will check an input address against the address on file for the credit card being used in a transaction, and alert you if there is a discrepancy. This can be particularly important for fraud prevention, such as cases where a stolen credit card is being used, or a transaction involving a domestic order originates from a region with a high risk of fraud.

Here is how AVS works:

When your customer enters their address during checkout and clicks purchase, it starts the following process:

1. Your payment gateway sends the address data to the customer’s credit card brand (Visa, MasterCard, Discover, or American Express).
2. The brand then sends this information to the credit card issuer. The issuer compares the address with the address stored on file.
3. The issuer then sends an authorization status and associated AVS response code to your payment gateway.

Which of these is more important?

The answer is both of them. Here’s why:

• An out-of-date contact address could trigger an alert from address verification. As this article points out, these alerts could trigger a manual verification process that puts an order at risk.
• Address verification only looks at the numerical portion of a street address and its ZIP code, which means the address itself could still be wrong, misspelled, or undeliverable.
• Address validation by itself only involves the validity and deliverability of an address, not whether recipients are who they say they are – particularly when it comes to payment.

However, the order in which you use these services does matter: you should validate addresses before doing credit card address verification because using unvalidated addresses puts you at risk of false-negative credit card declines and lost business.

With more people ordering online than ever before, particularly among at-risk demographics such as older consumers, address validation has become even more critical. (Not to mention the increased need for accurate delivery addresses.) Having both kinds of AVS tools working together helps ensure sales conversion and customer retention during this unprecedented new era of e-commerce.

Our AVS partners with your AVS

Our flagship DOTS Address Validation products correct, standardize and append mailing addresses worldwide, while helping your critical mailings and shipments avoid delivery problems – an issue affecting nearly 7 billion pieces of mail per year in the United States alone. We offer specialized validation services for US, Canadian and international addresses, as well as a range of additional products that can power your address data with geolocation, demographics and more.

These products can be easily integrated with your ecommerce, business automation or data entry platforms using API interfaces, and our knowledgeable technical staff is happy to advise your team on integrating these tools within your current order processing and credit verification environment. We’re fully staffed and ready to help your business at a critical time.