Verification

Verification, as it pertains to payments, describes the process of confirming the identity of the sender or recipient of a financial transaction.

In the context of the credit or debit card transaction process, verification happens when the merchant and issuer confirm that the cardholder’s preferred payment method is valid and has sufficient funds for a purchase. Merchants can verify the identity of cardholders via several methods, including:

• Multi-factor authentication: Here, a buyer is required to prove their identity using biometric data or a one-time SMS- or app-based security code
• Card Verification Values (CVVs): This is a 3 or 4-digit security code on the back of a credit or debit card that confirms the buyer has their physical card in hand.
• Address Verification Service: This compares a buyer’s address against the address on file with the issuer. Only buyers who enter matching addresses may checkout.

Verification is important because it reduces the risk of account takeover fraud or identity theft. Secure verification methods also help merchants stay compliant with guidelines like Payment Card Industry Data Security Standard (PCI-DSS). In that way, it helps maintain trust between sellers and cardholders.