
How Address Verification Services Can Help You Reduce Fraudulent Transactions?
In a card-based economy like the US, reducing credit card fraud is a significant concern among merchants and customers. We need some reliable safeguard mechanism that can stop fraudsters from stealing money from people.

On average, around 3.2 million frauds occur annually in the US alone. Among monetary losses, credit card theft is the most common contributor to these frauds. Using address verification services is a solid step to keep merchants and customers from fraudulent transactions.
You must’ve heard about AVS if your business is trying to take fraud prevention measures. This blog is perfect for learning how address verification services can save companies from fraud. You will also know how to address verification services and their potential shortcomings. Business professionals will also understand how to start address verification services.
What is an Address Verification Service?
It is an address verification service that helps organizations detect and avoid potentially fraudulent transactions. It runs multiple checks to compare a customer’s billing address with the billing address on the card. If there’s a mismatch, the merchant receives an alert but has the power to go through the transaction anyway.
Businesses from the United States, the United Kingdom, and Canada often use address verification services to reduce fraud and unnecessary chargebacks. An AVS tool flags address mismatches as potential fraud. Many companies also use these tools for US postal service address verification. For example, American Express provides built-in tools to reduce fraud.
What is an AVS Check?
Address Verification Service (AVS) checks help individuals avoid credit card fraud. An AVS tool verifies whether the individual placing the order and the cardholder are the same person. AVS checks consider the address and ZIP code of the customer’s order and bank records.
It is an effective mechanism to prevent unauthorized users from misusing credit cards in online stores. Businesses can save thousands of dollars by implementing a solid address verification service in their checkout process.
Also Read: Address Validation for Salesforce
When Merchants Use Address Verification Services?
These days, address verification services are standard in every credit card scenario. They are a common anti-fraud mechanism in e-commerce and other card-not-present transactions. These transactions have a limited means of cardholder identity verification. Yet, AVS can be helpful in person as well.
An address verification service is essential to verify enhanced data transactions like levels I and II. It includes transactions requiring corporate or government cards.
A Strong Chargeback Defense
A merchant has to fulfill chargeback requests by paying the cardholder and bank. It could be a significant setback for businesses wanting to grow without losses. Address verification services will give you a proper defense mechanism against chargebacks.
How Do Address Verification Services Work?
A typical address verification system works to protect both cardholders and merchants through the following steps;
- The buyer goes to the checkout window.
- They need to provide their payment details and billing address.
- The merchant requests an address verification service (AVS) check.
- The address verification service then compares the billing address with the cardholder’s address.
- The AVS code check shows one of the following results;
- Full Match
- No Match
- Partial match-ZIP code
- Partial match-address
- Absent
- International address
- The merchant will receive the outcomes.
- The merchant will have the choice to accept, reject, or investigate further.
Card issuers and payment processing providers often address verification services to businesses as a practical step to reduce credit card fraud. The verification process takes place during the card authorization step of a transaction. A customer must provide a billing address while submitting a card to process the payment.
The payment gateway reaches the respective bank to authorize the transaction and check the following things;
- The account has sufficient funds or credits to fulfill the amount in the transaction.
- The validity of the card.
- The user’s input must match the card verification value (CVV) code. It is usually a three- or four-digit code on the back of a card near the signature line.
- The billing address from the checkout window should match the address on file for the card.
Businesses usually deploy an address verification service for card-not-present (CNP) scenarios, like online purchases. It helps them to authenticate the cardholder’s identity.
What are Address Verification Service Codes?
After finding the address for a card, the issuer will send a single-letter code, an AVS authentication response code. These codes may differ from network to network. Businesses can gain vital insights on the steps they should take for the transaction.
The entire process of generating address verification service codes takes no more than a few seconds. You don’t need to worry about the postal service address verification process as a business.
What is "AVS Rejected"?
This message only shows when the card issuer refuses to authorize a transaction. It takes place when the address of the order placement doesn’t match the address the issuer has on the banking details. Any discrepancy between the two addresses will show codes indicating a refusal of the transaction.
A Popular Example of Address Verification Services
Amazon’s address verification system is one of the most famous examples of address verification services for e-commerce. Imagine a customer who wants to purchase a pair of sneakers from Amazon. They will enter their billing address during checkout; the following process will take place;
- Amazon’s payment gateway will send the address data to the customer’s credit card issuer.
- The credit card company will send the same data to the issuing bank. Then, the issuer will run comparisons about the address present on records.
- The issuer will send an authorization status and AVS response code to Amazon.
Any mismatch between the customer’s address and address data present with the issuer will result in a refusal of the transaction. At the same time, if the two addresses match, the AVS authentication response code will inform the merchant. Then, they will authorize the transaction.
Real-World Examples of Address Verification Checks
We will evaluate real-world scenarios to understand better how address verification services work.
- Suppose a scammer has stolen Daniel’s credit card details by monitoring his web browser. This criminal now has Daniel’s full name, credit card number, and a CVV code. Yet, this fraudster won’t know the address present with the credit card account.
- The actual cardholder (Daniel) will have access to this information. An address verification service can help the merchant deny purchases with this card.
- Here’s another scenario: Richard shops at his favorite retail store with this credit card. He leaves his card at the store, and someone takes it. Now, they try to use it to purchase something online.
- The thief has a card with a code on the back. However, he still misses the address. An online store can prevent a fraudulent purchase and a possible chargeback with the help of an address verification service.
- This last scenario could be the worst-case scenario. Victor continues a fishing trip and stops his truck to fill gas from a rural gas station. Impatient, he drops his wallet, consisting of all his credit cards and other vital documents.
- A clever person observes, takes his wallet, and quickly goes to an online store. This thief can now access the physical card with the CVV code and driver’s license for address verification. In this scenario, there’s not much a merchant can do to avoid the fraudulent transaction. Yet, still, the merchant has a higher chance of winning a chargeback dispute since they were using address verification services.
Address verification services may not be the perfect solution for ending CNP fraud. Yet, they play an essential role in implementing an extra layer of security for card transactions. They can protect both merchants and consumers.
Address Verification Services are Necessary for Customers and Merchants
An address verification service is super helpful for merchants to manage their transactions.
Customers: An address verification service helps customers add lines to avoid theft and attempts of misusing their credit cards.
Merchants: They can rely on AVS response signals to determine the genuineness of a transaction on their platform. Address verification services protect them from fraud and unnecessary chargeback requests. Otherwise, it would be costly for merchants and frustrating for customers.
Best Practices for Merchants Using an Address Verification Service
An AVS system will simplify the payment gateway process and reduce fraudulent transactions. Yet, as a merchant, you need to follow these steps;
- Every customer must provide the billing address that appears on their monthly statement.
- Include the address numbers when requesting authorization for improved security.
- You need to pay attention to all AVS partial matches. They show that the billing address has the same numeric ZIP code or the same numeric values as the street addresses. Yet, both values are not the same. A ‘no match’ response code shows nothing matches the card issuer data.
- To avoid false positives, you should evaluate AVS’ no match.’ However, they are a clear indicator of fraud. Sometimes, there may be incorrect positive results. In such situations, the merchant should take additional steps to authorize the order instead of simply declining the transaction.
- A ‘no match’ response code doesn’t automatically mean you will have to decline the transaction. If you do a little research, it may make the purchase valid.
- The address verification service will provide you with the response code. However, the merchant needs to make the final decision. It’s worth getting follow-up and additional information before declining a transaction.
- You need to provide clear and timely communication to customers. It can significantly reduce the chances of chargebacks by resolving issues before they become significant disputes. As an active merchant, you proactively respond to customer inquiries and address potential problems. The consumers must clearly and straightforwardly understand their information about transactions.
- If you are a merchant using AVS checks, request that your customers provide precise billing street address details. It would drastically reduce the false positives for fraudulent transactions.
Challenges of False Positives While Running US Postal Service Address Verification
Not every “no match” response by an AVS system means a fraudulent purchase. However, it may still be a valid purchase. For example, a customer with a new home who hasn’t notified the bank about the move could give a false positive. It would help if you started follow-up by considering the following tips;
- Call the customer to verify the billing address, home address, and contact number manually.
- You can also reach the cardholder’s issuer to match the name, address, and contact number with their records.
- Internet search tools and directory assistance can also help you contact the billing street address and confirm who started the transaction.
Apart from having an address verification service, your payment gateway should consider other mechanisms. It should consider measures, such as biometric identification, CVV, IP address verification, device authentication, and 3D security.
It’s vital for a business to implement a multilayered fraud prevention system to protect the organization and legitimate customers.
Is It Worthy to Invest in Postal Service Address Verification?
In the age of cyber fraud, it becomes necessary to verify every transaction. Fraud or unnecessary chargebacks can be critical problems for emerging e-commerce businesses. For this reason, an address verification service is a worthy investment for every merchant who wants fraud prevention. You also get a good piece of evidence to fight against chargebacks.
Reinforcing Your Online Security with Postal Service Address Verification
It would help to use other verification tools to get the best results from address verification services. It will help you evaluate the genuineness of a transaction and keep your site safe from fraudulent attacks.
You must invest in a high-quality address verification service that helps you in multiple ways. It must verify, validate, autocomplete, and standardize addresses according to local postal standards. You will be able to ensure a reduction in fraud, up-to-date records, and eliminate return packages.
Escalate the User Experience with Address Verification Services
A minute glitch or gimmick in your website can impact your brand image. Creating a smoother user experience is mandatory to keep yourself in the back of the customer’s mind. Using a simple address verification service can do wonders for your website.
It will create a safer environment with higher trust and let you reduce bounce rates and abandoned carts. You can smoothen the entire checkout process and escalate the user experience.
Should I Consider Address Verification Services for My Business?
Today, address verification services are one of the most effective methods to prevent credit card frauds that damage businesses and consumers. It would help if you had this tool to fight against credit card fraud and validate addresses.
As a result of AVS authentication not being perfect, there is a possibility of failure. If the billing address provided by a customer does not match the issuer’s records, there is a high possibility of fraud. Address verification services are beneficial regardless of these potential drawbacks.
What Could be Some Potential Shortcomings of Using These Services?
Address verification services aren’t perfect solutions for preventing fraud. They can lead to the following shortcomings if you are not ready for implementation;
No Free Service
An AVS service provider will charge a certain amount for verifying addresses using their infrastructure. It is not a free solution that you can implement without even blinking an eye. However, charges are relatively less considering so many options in the market.
False Declines
In many situations, there could be legitimate reasons behind the address mismatch. For example, one may forget to inform the bank after moving to a new location. An address verification service displays the likelihood of a fraudulent transaction, but it does not guarantee it.
Being too lenient with questionable transactions will indeed invite fraud. Yet, being too aggressive with such transactions can also lead to false positives and frustrated customers.
Scammers Are Getting Smarter
The rise of digital awareness among consumers is also making scammers much more innovative than ever. They can evaluate a system’s limitations, like its only focus on numeric data. Exploiting these limitations is slowly becoming a common practice among scammers.
For example, an AVS code system will look for matching street numbers and ZIP codes. The system will generate a “match” response even if the name and street differ. An address verification service alone would be insufficient to fight against fraudsters.
Fraud Patterns are Changing
Scammers often steal credit card data with massive data breaches. They find this vital information in a bunch of illicit websites. Suppose a fraudster gains access to a stolen card number.
Then, there is a high chance that they also have the customer’s name and address. This vital information can entirely defeat the purpose of an address verification service.
The Need to Consider the Global Market
Address verification services are primarily available in the US, the UK, and Canada. However, the e-commerce industry is growing worldwide because of its simplicity and convenience. Thus, merchants need solutions that can cover an international market. This way, you can also verify customers coming from other countries.
The Risk of Losing Trust
Imagine you are using an e-commerce platform and unable to go through the checkout process. All you get is a false positive that your billing address differs from yours. Even though it is a legitimate purchase, an address verification service may decline the transaction.
It only leads to customer frustration and inconvenience. Many refer to this situation as the “customer insult rate.” Businesses use this measure to calculate the negative impact of a decline.
An organization can have long-term reputation damage if this rate is too high. Many merchants have the common misconception that an address verification service completely protects their business from liability for fraudulent chargeback claims. You must understand that card networks have the actual command to determine the rules of merchant chargebacks.
It means they can determine the fraudulent transaction detection, flagging, and identification rules. Moreover, each network can define its rules for “not authorized” and “unrecognized” transactions. They can even dictate how and when a merchant can contest disputes and chargebacks.
Using PostGrid Address Verification Services
Are you looking for an address verification service that lets you verify, validate, standardize, and autocomplete addresses? PostGrid address verification API provides multiple benefits over other platforms. Here’s why you should consider our platform;
Recognition from USPS
We are a fully CASS-certified service that helps verify accurate US postal service addresses. PostGrid provides validation services by meeting USPS postal requirements. It also allows us to avail substantial postal discounts on validating addresses.
Highly Scalable API
As a business, you may need to run bulk address verification tasks to maintain your address database. For this use case, you must have a reliable and scalable service provider that lets you run validations at any scale. PostGrid’s address verification can perform a million API calls per second. Businesses can get a reliable option to scale their validation tasks according to their needs.
Simple Installation and Setup
There’s no need to spend hours installing and setting up our address verification service. PostGrid is easy to install and use with a dedicated support team and API documentation. After setting up the postal service address verification API, you start your verification process quickly.
Complete Adhere to Data Privacy Regulations
You cannot compromise on compliance while looking for an address verification service. PostGrid adheres to data privacy and HIPAA, PIPEDA, SOC-1, SOC-2, and GDPR. When you choose our platform, you have the assurance of data privacy regulations. We keep your data completely confidential by following the data compliance rules.
Simpler Integrations
You can easily integrate our address verification service with your website, CRM, marketing tools, and over 1600 tools. The zero-code and Zapier integrations benefit businesses that want to verify address lists with maximum efficiency.
Competitive and Flexible Pricing Plans
PostGrid gives several plans for customers with different requirements and preferences. It helps businesses to get the most out of our address verification service without breaking the bank. We provide transparent volume-based pricing and never impose any minimum charges.
Delivery Point Validation
Our address verification service can use a Delivery Point Validation system to mark addresses with distinctive DPV codes. It can help the merchants categorize addresses and verify whether the same exists. They can also find the deliverable addresses and target their campaigns to these particular areas. We consider available address points like street area, apartment number, city number, and more.
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