The Address Verification System is used in e-commerce and telephone sales to confirm the identity of credit card holders by matching the numerical parts of their address. It is an optional security measure used to reduce liability, and is limited to certain countries.
In today’s world of rampant identity theft, systems like the Address Verification System help confirm the identity of credit card holders during order processing. The Address Verification System matches the numerical parts of a credit card holder’s address in an attempt to ensure that the credit card number and/or expiration date has not been stolen. Cardholders, merchants, and credit card companies have an interest in ensuring that the cardholder actually orders services or merchandise.
Traditional brick-and-mortar stores generally do not use the Address Verification System since the cardholder is present and the merchant may require additional identification, such as a driver’s license. However, in e-commerce and telephone sales, the Address Verification System is used quite often. This is because it is easier to commit identity theft and use a stolen credit card online or over the phone.
A company that uses the Address Verification System will typically ask the consumer for the billing address of the credit card they are using. The numeric values of the address and zip code are compared to the records on file with the credit card company almost instantly. If the numbers do not match, the transaction may be declined. If the Address Verification System is not used, the transaction may also be declined.
It is important to note that the address verification system is not required by the credit card company in most cases. It is an optional level of security that merchants or credit card banks may choose to enforce to reduce liability. A bank or credit card company may charge a higher fee if the additional security layer is not used, or a merchant accepting orders may choose to make it a mandatory policy within the company.
Another level of security is called a CVV2 number. This is a 3-digit number on the back of the credit card near the signature line. Merchants who request a CVV2 code during a credit card transaction are trying to prove that the card owner is the one making the purchase.
The Address Verification System is limited primarily to the United States, Canada, and the United Kingdom. Few other countries support this level of security. MasterCard and Visa are the major credit card companies that use the Address Verification System, and American Express limits use of the system to the US only.
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