Address Verification Service (AVS) Explained: How It Prevents Credit Card Fraud in 2025

Thomas J Catalano, a Certified Financial Planner (CFP) and Registered Investment Adviser since 2018 in South Carolina, brings extensive expertise in investments, retirement, insurance, and financial planning.

The Address Verification Service (AVS) is an essential fraud prevention tool used by credit card processors and issuing banks to help merchants detect and reduce suspicious credit card transactions. AVS compares the billing address provided by the customer against the address on file with the card issuer to confirm legitimacy.

Key Insights

• AVS helps merchants identify potentially fraudulent transactions by verifying billing addresses.
• The service matches the customer's entered billing address with the cardholder's registered address.
• During transaction authorization, AVS returns response codes to guide merchants on approval or decline.
• Merchants decide whether to accept or reject transactions based on AVS results.
• Additional fraud prevention tools include CVV checks, IP verification, biometric authentication, and device recognition.

What Is Address Verification Service (AVS)?

AVS is a fraud detection mechanism designed to minimize credit card fraud and chargebacks by verifying that the billing address entered during checkout matches the cardholder’s address on file. This verification occurs during the payment authorization process, where the card processor returns a code indicating the level of address match.

Widely adopted by major credit card companies, AVS is particularly effective in combating card-not-present (CNP) fraud. However, it is not infallible; legitimate transactions may be declined if the billing address has recently changed or was recorded incorrectly.

Important Note

AVS primarily supports addresses from the U.S., Canada, and the U.K., playing a critical role in credit card authentication within these regions.

How Does AVS Work?

When a customer inputs their billing address during checkout, the payment gateway forwards this information to the card network (Visa, MasterCard, etc.), which then communicates with the issuing bank. The bank compares the provided address with its records and returns an AVS response code to the merchant.

These response codes, typically single letters, inform the merchant whether the addresses match fully, partially, or not at all, helping guide the decision to approve or decline the transaction.

AVS is commonly integrated within a layered fraud protection strategy to enhance transaction security.

AVS in Action: A Practical Example

Consider a customer shopping on Amazon.com. During checkout:

1. Amazon’s payment system sends the entered billing address to the credit card network.
2. The network forwards this data to the issuing bank for verification.
3. The issuing bank compares the address and sends back an AVS code indicating the match status.

If the addresses do not align, the transaction might be declined; if they match, the transaction proceeds smoothly. This process is quick and seamless from the customer’s perspective.

Additional Considerations

While AVS significantly reduces fraud risk, it can occasionally cause false declines or partial matches requiring further validation. Merchants should complement AVS with other security measures such as CVV verification, IP address checks, 3D Secure authentication, biometrics, and device fingerprinting.

Credit Card Verification Timeframe

Verification speed varies by provider but typically takes just a few seconds, ensuring minimal disruption to the checkout experience.

Understanding CVV Numbers

The CVV (Card Verification Value) is a three-digit security code on the back of credit cards, used to confirm the cardholder physically possesses the card during online transactions.

Protecting Yourself From Credit Card Theft

To safeguard your credit card, avoid sharing details, enable account alerts for suspicious activity, and monitor your statements regularly.

Conclusion

Address Verification Service is a vital component in the fight against credit card fraud, helping merchants and banks authenticate transactions and protect consumers. By combining AVS with other security practices and vigilant monitoring, you can significantly reduce the risk of fraudulent charges.

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