Address verification and verification of credit card security codes are services available for Visa, MasterCard, American Express and Discover cards enabling agencies to reduce the risk of fraudulent transactions. For many government programs the risk of fraud is already minimized since customer identifiable information is often tied to the payment. For other programs, which are more similar to retail environments in which identifying information is not obtained, the risk of fraud is greater.
Address verification services (AVS) is required, however, for agencies to receive the lowest possible interchange rate for Visa transactions accepted through non-face-to-face programs. Failure to utilize AVS will result in substantially higher rates. For example, a hypothetical Internet application accepting payments for $50 permits would be eligible for a 1.694% rate from Visa and MasterCard transactions if AVS was used, this may increase to 2.005% for Visa transactions if AVS was not used.
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Design Consideration Agencies accepting Visa cards through non-face-to-face programs should utilize address verification services to receive the lowest possible rate. |
Address verification matches the billing address or zip code provided by the cardholder against the address files of the Visa and MasterCard issuing banks and American Express' and Discover's processing systems. Address verification is most useful for non-face-to-face transactions (i.e., mail order, telephone order and Internet order). Address verification is performed at the time the transactions are being authorized, and may result in the declination of the address verification, but approval of the transaction itself.
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Design Consideration Agencies utilizing address verification will need to decide upfront whether they wish to accept or reject transactions which are approved through the authorization process but fail address verification. |
Security codes are printed on the cards, but are not part of the account number, and can be compared against the values on file with the MasterCard and Visa issuing banks and American Express' and Discover's processing systems. These numbers are sometimes used for Internet payment as a fraud prevention measure to verify the customer has physical position of the card being used. Following are the names and abbreviation of these codes for the different card types:
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Card |
Security Code |
Abbreviation |
|
Visa |
Card Verification Value 2 |
CVV2 |
|
MasterCard |
Card Validation Code |
CVC2 |
|
American Express |
Card Verification Value 2 |
CVV2 |
|
Discover |
Customer Identifier |
CID |
The location of these codes, which appear in reverse italic, are represented in diagram 3.
Like address verification, this service is most useful for non-face-to-face transactions and is also performed during authorization.
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Design Consideration Agency's processing transactions in a non-face-to-face environment which could be exposed to fraud, should consider utilizing address or security code verification. |
Agencies will not receive a lower rate if security code verification is used.