As a payer, you will get tense when your transaction fails. Regardless of the reason, this condition can force you to opt for cash payment or cancel the transaction if the transaction keeps declining frequently.
Among the various reasons, AVS mismatch is a common reason that takes place during online transactions.
What does an AVS mismatch mean? In this article, we will cover the answer to this question. So, please keep your eyes stuck on the screen and understand it well till you reach the last word.
What Is AVS and Its Working Process?
AVS stands for Address Verification Service, a security measure that companies use to prevent fraudulent activities. This applies to the e-commerce industry, where online purchasing is a part of the business.
AVS has a simple mechanism. It checks and matches the address that the customer enters during the checkout process with the account holder’s address details. If the address is matched, the transaction proceeds. However, it declines the transaction when it finds an address mismatch.
House numbers and zip codes are the two major focuses of AVS checking. In this way, it prevents fraud and suspicious payment processing.
The following four card networks in the USA, Canada, and UK offer AVS:
- Visa
- MasterCard
- Discover
- American Express
AVS Working
AVS checking is held during the payment processing authorization period. Along with the payment request, a request for billing address checking is sent to the issuing bank or card network. The bank then checks the billing address details that the payer provided during the transaction. It sends various codes to the merchants, indicating the status of address matching. Merchants accept or reject the payment accordingly.
There are three major conditions during the AVS verification:
1. AVS Match
The address given by the cardholder during the checkout process exactly matches the address held by the card issuer.
2. AVS Partial Match
In AVS partial matches, either the customer’s zip code or the house number is matched with the details given by the cardholder.
3. AVS Mismatch
In this condition, the cardholder’s zip code and house number do not match the details held by the card issuer.
AVS Mismatch Codes
Here are AVS mismatch codes with different purposes. These codes change between card networks.
| Code | Purpose |
|---|---|
| A – Partial Match | This code refers to the matching of street addresses but not zip codes. |
| G – International Card | Indicating that the issuing bank is an international bank. |
| R – Retry | It refers to the server issue. Users can run it again. |
| N – No Match | Both the street address and the zip code do not match what the bank has on the file. |
| U – Unavailable | This code refers to the bank that does not have information on file, or that does not support AVS. |
| W – Partial Match | This code refers to the matching of the 9-digit zip code, but the street address remains unmatched. |
| X – Full Match | This code refers to the matching of a 9-digit zip code and street address. |
| Y – Full Match | This code refers to a 5-digit zip code and corresponding street address match. |
| Z – Partial Match | This code refers to a 5-digit zip code, but the street address is not matching. |
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Why Does AVS Mismatch Happen? Common Causes
Rather than one major cause, several causes lead to AVS checks failing. Some of them are as follows:
Changing of Address and Recent Shifting of Customer
An AVS mismatch occurs when the customer recently shifted to a new location and did not update the current address associated with the card’s account. Due to outdated details, an invalid AVS condition will occur.
Non-US Billing Address
AVS verifies only US billing addresses because it is a US-based system. If the customer’s credit card is registered in different countries, the AVS error will be high.
Virtual Credit Cards
Virtual credit cards are digital forms of credit cards (also referred to as temporary credit card numbers) generated for a single transaction. Customers use these numbers when they are concerned about the security of their credit card information. There are AVS mismatches because billing addresses are not present on virtual credit cards.
Billing Information Is Not Correct
The most common cause of AVS mismatch is incorrect billing information or outdated data. The AVS will flag the transaction for an AVS mismatch that occurs when the customer enters the wrong billing information.
No Support from the Bank
Some banks do not support AVS, which results in a high risk of fraudulent transactions. Transactions go on without AVS verification security, which is part of an invalid AVS.
Systems Technical Issue
Sometimes, technical issues or integration problems of the AVS with the payment system lead to AVS system errors, which prevent the AVS process from proceeding.
Which Types of Fraud Is Impossible for AVS to Catch?
Advanced Fraud
Advanced fraud refers to the use of advanced technology to perform fraudulent activities. Scammers easily detect advanced information along with basic details, so the address verification system will not work in such cases.
Friendly Fraud
Friendly fraud refers to the condition where the cardholder disputes the legitimate purchase, also known as a chargeback. Customers sometimes incorrectly assert that their credit card was used without their consent. The cardholder knows their address well.
How Is It Possible to Fix AVS Mismatch Errors?
There are various ways to prevent AVS mismatching. Merchants can follow the measures listed below.
Reprocessing of the Transaction
If the customer enters the wrong address details by mistake and the transaction fails, you can reprocess it.
Override the AVS Controls
Another option is to override the AVS system. You can contact the customer to obtain details that claim they are a cardholder. However, this is a risky approach because scammers can easily obtain business details.
Order Cancellation
The last approach is to cancel the order when you don’t receive accurate address information from the cardholder’s side. This approach can also impact negatively on your customer experience.
How to Prevent AVS Mismatching?
Incorporating the 3D Secure Protocol
A 3D secure protocol is additional authentication in the form of biometric authentication or a one-time password. This protocol can reduce fraudulent transactions and AVS mismatching because customers need to pass these security steps.
Utilizing Fraud Detection Software
Sometimes, users do multiple transactions from the same IP address or perform a transaction of a high amount. Fraud detection software analyzes these transactions in order to detect suspicious actions.
Spreading Awareness
Professionals can inform their customers about AVS mismatching by sharing important guidelines on credit card risks. Additionally, they can provide instructions on what to do when a customer submits an address.
What Are the Advantages and Disadvantages of AVS for Businesses?
Advantages
Enhanced Customer Trust
A good security measure always impacts the customer experience and enhances their trust. This is because a customer will feel safe when the transaction is secured.
Cost Effective
AVS is a budget-oriented fraud prevention approach. It requires little investment to process while streamlining the overall operation.
Fraud Reduction
An address verification system always helps to prevent credit card fraud by detecting and preventing unauthorized transactions. A fake person cannot bypass AVS even using a stolen credit card.
Disadvantages
Will Not Stop the Entire Fraud
AVS is not an all-in-one solution to prevent credit card fraud. It will be easy for a fake person to pass the AVS phase if a fraudster knows the full and correct billing address.
Customer Complaints
There are many chances of customer complaints. The AVS system is a reasonable tool for blocking credit card fraud, but it could cause a bad customer experience. This is due to the non-processing of legitimate transactions.
What Is the Impact of AVS Mismatch on Merchants and Customers?
Sales Get Lost
AVS mismatch is a cause of lost sales because the chances of an order being canceled are high when the customer experiences a credit card AVS mismatch. This leads to many sales and impacts the merchant’s business.
Decline Merchants’ Reputation
AVS mismatch can cause customers to be highly frustrated and never return to merchants’ shopping websites. This will impact the merchant’s reputation while reducing customer loyalty.
Transaction Delay
When an AVS mismatch is present, verification of the customer’s identity is needed before approval of the transaction. This could delay the transaction process, which could frustrate the customer.
False Decline
AVS results in a false decline when the customer enters outdated information. This may also occur when fraud anticipation tools block the customer.
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Final Remarks
AVS mismatches are common in online transactions, and there are various reasons behind them. However, professionals can prevent AVS errors using the above measures. Address verification systems are crucial security measures for credit card companies. However, they are not foolproof and are always a part of comprehensive fraud prevention.
Frequently Asked Questions
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
