Address Verification ServiceWhat Does AVS do & What do all the AVS Response Codes Mean?

Why You Still Need Address Verification Service… Even if it Won’t Be Enough on its Own

Address Verification Service, or AVS, is one of the most widely used payment card fraud prevention tools among merchants in the US.

The tool works by checking the given address of a credit card against the address the bank has on file during a transaction. If there’s a mismatch, this suggests that the buyer might be engaged in card fraud.

AVS can help stop fraudulent transactions before they go through. But can AVS stop every act of fraud? Also, how effective is AVS against chargebacks? Let’s find out.

What is AVS?

Address Verification Service (AVS)

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Address Verification Service is a fraud-prevention tool that verifies the billing address given by the customer at checkout. The tool matches the address provided against the one associated with the cardholder’s account, and flags address mismatches as potential fraud.

If you accept card-not-present transactions, including online, phone, or mail-in orders, you know that confirming the identity of the person making the purchase can be hard. The Address Verification Service was created to help solve this problem.

Mastercard originally designed the Address Verification System in response to spikes in CNP fraud. The address validation process is now widely used by other major credit card companies, too. Visa, Discover, and American Express all currently offer Address Verification Service to merchants in the US, Canada and the UK.

While AVS can help reduce the risk of fraud and chargebacks, it’s not a comprehensive solution. As fraudsters devise more and more sophisticated tactics, the address verification system may be falling behind in terms of effectiveness. That said, it’s still a very effective antifraud tool, as we’ll see later on.

How Does AVS Work?

The Address Verification System works basically as follows:

• The buyer — not necessarily the cardholder or an authorized party — enters their address at checkout and submits the order.
• The address information is transmitted to the processor, where the given address is compared to the address the cardholder has on file with the issuer. Note that only numeric values (street number, box number, zip code, etc.) are compared.
• A response code is generated based on one of six basic conditions: full match, no match, partial match, zip code match, data unavailable, or international address. The entire process is seamless and takes mere seconds.
• Based on the response code, you can decide to either accept or reject the transaction. This decision should take into account indicators generated by other fraud detection tools as well.

Address Verification Service can tell you that an order may — or may not — be a case of fraud. You’ll need to use your best judgment and decide whether to proceed with the transaction on your own, though.

You may choose to require additional information from the customer to confirm their identity. You can also set up accept/decline parameters to automatically trigger a decline if certain codes are returned. The latter practice is not without its risks, however, as we’ll see later on.

What are the AVS Response Codes?

Address Verification Service response codes are returned by the credit card issuer in response to each AVS verification request. The AVS response code provides you with information about the outcome of the AVS check. This code indicates whether the billing address information provided by the customer matches the information on file with the issuer.

There are several different AVS response codes, each of which provides different information about the outcome of the AVS check. Examples include:

Those are just a few of the most common AVS response codes. However, there are more than two dozen response you may receive, depending on the card brand involved. Check out the full list of AVS response codes below:

Code	Visa	Mastercard	Discover	American Express
A	Street address matches, ZIP does not	Street address matches, ZIP does not	Street address matches, ZIP does not	Street address matches, ZIP does not
B	Street address matches, but ZIP not verified.	Not applicable	Not applicable	Not applicable
C	Street address and ZIP not verified	Not applicable	Not applicable	Not applicable
D	Street address and ZIP match (International Only)	Not applicable	Not applicable	Not applicable
E	AVS data is invalid or AVS is not allowed for this card type.	Not applicable	Not applicable	Not applicable
F	Street address and postal code match (UK Only)	Not applicable	Not applicable	Street address matches, card member name does not match
G	Non-U.S. issuing bank does not support AVS.	Not applicable	Not applicable	Not applicable
I	Address information not verified for international transaction	Not applicable	Not applicable	Not applicable
K	Not applicable	Not applicable	Not applicable	Card member name matches
L	Not applicable	Not applicable	Not applicable	Card member name and ZIP match
M	Street address and postal code match (International Only)	Not applicable	Not applicable	Card member name, street address, and ZIP code match
N	Street address and ZIP code do not match	Street address and ZIP code do not match	Street address and ZIP code do not match	Street address and ZIP code do not match
O	Not applicable	Not applicable	Not applicable	Card member name and street address match
P	Zip code matches, street address unverifiable due to incompatible formats (International Only)	Not applicable	Not applicable	Not applicable
R	System unavailable, retry	System unavailable, retry	System unavailable, retry	System unavailable, retry
S	AVS not supported	AVS not supported	AVS not supported	AVS not supported
T	Not applicable	Not applicable	9-Digit ZIP matches, street address does not	Not applicable
U	Address information unavailable. Returned if the U.S. bank does not support non-U.S. AVS or if the AVS in a U.S. bank is not functioning properly.	Address information unavailable	Address information unavailable	Address information unavailable
W	9-Digit ZIP matches, street address does not	9-Digit ZIP matches, street address does not	9-Digit ZIP matches, street address does not	Card member name, ZIP, and street address do NOT match
X	9-Digit ZIP and street address match	9-Digit ZIP and street address match	9-Digit ZIP and street address match	Not applicable
Y	5-Digit ZIP and street address match	5-Digit ZIP and street address match	5-Digit ZIP and street address match	5-Digit ZIP and street address match
Z	5-Digit ZIP matches, street address does not	5-Digit ZIP matches, street address does not	5-Digit ZIP matches, street address does not	5-Digit ZIP matches, street address does not

AVS response codes can tell you a lot about the risk associated with a particular transaction. For example, an “M” or “X” response suggests that the transaction presents a low risk of fraud, while an “N” or “U” response code indicates a higher risk level.

The Pros of Using AVS

The main “pro” of using AVS is pretty obvious: it protects you against fraud (and the resulting chargebacks).

The Address Verification Service was designed to detect traditional criminal fraud, and it is very effective at doing that. AVS will flag a transaction submitted by a criminal using a stolen card who has no idea what the cardholder’s address could be.

The address validation process works accurately in such situations. So, in that way, AVS adds an extra layer of security during the transaction, protecting both you and your customers.

Plus, using AVS may literally stop many chargebacks from getting filed in the first place. Effective October 19, 2024, Visa will require an explicit explanation from issuers as to why a cardholder wants to dispute a card-not-present transaction using any reason code in the “Fraud” or “Authorization” categories when the transaction in question has an AVS match. If the issuer cannot provide that explanation, the dispute will not be allowed.

The Cons of Using AVS

AVS codes are designed to provide guidelines… not absolute answers.

One of the main limitations of a system that only analyzes numerals is that it affords a lot of room for interpretation. When users provide a billing address at check-out, they're most likely operating from memory. No one is stopping to look up the exact address they gave the bank when applying for the card.

Maybe they put down their apartment number, maybe not. Maybe they used their 9-digit ZIP code. They could even mistype, hitting 0 instead of 9. There are several minor variables that wouldn't actually change the billing address, but might prevent an exact AVS match.

There are other shortcomings to consider here as well. For instance:

AVS & Chargeback Liability

Another factor that AVS tends to complicate is chargeback liability. A surprising number of merchants assume using AVS insulates their business from liability for fraudulent chargeback claims. This is not true, though. 

It’s important to understand that the card networks dictate the rules regarding merchant chargebacks. This includes determining how fraudulent transactions are flagged and identified, and each network maintains its own set of rules with regard to “not authorized” and “unrecognized” transactions. The card networks also dictate when and how a merchant can challenge disputes and chargebacks through representment.

Learn more about representment

AVS comes into play here when a merchant receives a chargeback due to suspected fraudulent activity. If you’re able to show the AVS match was positive, you’re better armed against the cardholder’s claims of fraud. However, many merchants mistake this for a “guarantee” against any dispute.

Different networks might place a higher value on AVS verification than others. The value of an AVS verification may even vary from one reason code to another.

If a fraudulent chargeback claim is made against you, you will probably need more than just an AVS validation to verify the cardholder’s identity. You will need to provide other evidence that the transaction in question was actually valid.

AVS: One Part of a Multi-Layered Strategy

None of this is meant to downplay the utility of the Address Verification Service. A solid AVS match is still a very reliable indicator of a good transaction. Plus, if you receive a “not authorized” or “unrecognized” transaction chargeback, which you believe was filed in error, then having a positive AVS match gives you a much stronger position to challenge the claim.

AVS is an important tool. It just shouldn’t be the only fraud prevention tactic in your arsenal.

AVS should be one component of a multilayered fraud and chargeback prevention strategy. A good approach here is crucial to ensure the safety of your transactions and minimize the financial impact of fraud and chargebacks. You should aim to: