When taking credit card payments from customers in an online environment, it’s impossible to verify a credit card with the customer as you would in a retail environment. This makes for a much more risky situation given the lack of verification with your customers. So how can you protect yourself against fraudulent charges that ultimately hurt your business and your wallet?
The answer is AVS – or address verification system.
AVS is a service provided by the payments provider (Total-Apps for example) that determines the match / partial match / or no match of the transaction given the parameters you provide in the payment gateway. The return comes during the authorization process of the transaction and is meant to automatically determine your next action whether it be approval or decline.
As a new business, it may come as a shock that you would want to decline certain transactions based off a non-match in zip code / address/ etc. We get it. You want all the sales you can get and the risk may seem unnecessary! But we’re here to show you how being conservative in the short run can lead to strong customer support, less time managing fraudulent charges, and a better experience for you and your customers in the long run. Because the benefits outweigh the costs (and they are small costs at that), we always recommend utilizing a strong and strict AVS system.
It’s important to note that while all major credit cards support the AVS system, not all issuers participate in AVS. This means that customers and their banks do hold a bit of control in the grand scheme of things. When this is the case, the response when authorizing a match will be met with “Service Not Supported” or “This Service is Not Available.” Ultimately, no match is possible. This leaves the ball in your court. You decide whether or not to approve the transaction. Typically, we see merchants that are faced with this decision end up having card holders bring the card to a physical place of business for approval. We know this isn’t always possible, especially with eCommerce-only businesses, but your final decision should be made with the avoidance of a potential fraudulent charge or chargebacks at the forefront of your mind.
How do you utilize AVS? What decides whether or not to approve a transaction or return a decline? Share your techniques and reasons below.