What is AVS and How Will it Help Prevent Chargebacks?
Detecting Fraud and Preventing Chargebacks
Address Verification Service is an automated fraud prevention system that aims to reduce the number of unauthorized transactions. AVS tries to prove the cardholder is the actual person participating in the transaction, thereby reducing the risk of fraud. AVS compares the billing address listed during the checkout process for card-not-present transactions to the address registered with the issuing bank.
The merchant uses AVS during the transaction authorization process, sending the data to the issuing bank for approval. Based on the information provided, the bank will issue one of several available AVS codes. The resulting code will help the merchant decide how to proceed.
Merchants have the ability to set their own rejection settings. This means a transaction will automatically be declined if certain codes are returned. By rejecting potentially fraudulent transactions, merchants can reduce the risk of chargebacks.
However, automatically declining transactions based on AVS codes can be detrimental. Merchants will most likely ban a significant number of false positives.
A better approach is to use AVS data in conjunction with a customized chargeback prevention strategy conducted by experienced chargeback experts.
AVS codes tell the merchant about the information provided in the checkout process and help the merchant decide how to proceed. The information provided during the checkout process will match what is on file with the bank exactly or partially; or, the information won’t match at all.
The Address Verification Service only analyzes numerals. It looks at the building number of the street address and the zip code.
Interpreting AVS Codes
Your processor and payment gateway work in conjunction to implement the Address Verification Service investigations on your behalf. Check with your payment gateway to determine which codes are automatically approved and which are rejected.
You have the option to change the default settings to either be more lenient or aggressive with fraud prevention.
Taking an aggressive stance against transactions that are perceived as “risky” could yield false positives, meaning you’ll miss out on a lot of potential revenue. You’ll want to review questionable transactions on a case-by-case basis.
Providing such personalized attention to chargeback prevention can eat up a lot of valuable resources though. Chargebacks911® offers services that provide the customized approach merchants need without draining in-house resources
Special Considerations for Approving or Rejecting Transactions
There are several processing stipulations you should be aware of when it comes to approving or rejecting transactions based on AVS results:
- If you choose to do business globally, you’ll need to use international AVS capabilities. This can increase your earning potential, but it also opens the door to fraud as many criminals original overseas.
- Pre-paid cards rarely have corresponding address information.
- It is possible for the transaction to be authorized with the issuer but declined because of your personal AVS preferences.
- Having a lenient stance against potential fraud and accepting failed AVS transactions could cost more in processing fees. Talk to your processor about how AVS will affect the discount rate.
AVS as Part of an Effective Chargeback Management System
Address Verification Service does help prevent fraud and the resulting chargebacks. However, merchants shouldn’t put too much faith in this particular tool. AVS is only one small part of a comprehensive chargeback management system.
There are a myriad of other steps a merchant should take to reduce the risk of chargebacks. Using AVS in conjunction with other prevention strategies produces the best results.
Contact us today and we’ll take a look at your current chargeback prevention efforts. We’ll let you know how much you could save by enhancing your prevention and representment efforts. What do you have to lose?! Our analysis is free and you are under no obligation to utilize our services. In fact, we’ll only suggest you use Chargebacks911® if we are able to improve your bottom line.