Some terms sound similar but aren’t actually interchangeable – like sympathy versus empathy or good versus well. In the data quality business, two similar phrases with totally separate meanings are Address Validation service versus Address Verification service (AVS) – and these have very important distinctions if you process credit cards. However, when used together, they can solve common credit card processing issues and increase sales, decrease fraud and provide better customer experiences. Let’s look at the differences between these two capabilities and how they can be used together.
Address Validation service vs. Address Verification service (AVS)
First of all, an Address Validation service ensures that your address is correct and deliverable – and often corrects addresses when necessary. An Address Verification service (AVS), by comparison, is supplied by credit card companies for fraud prevention. It is part of the credit card authorization process, ensuring that components of an address correspond to a specified credit card number the issuing company has on file.
A good example of Address Validation is our flagship DOTS Address Validation – US service (along with its Northern counterpart, DOTS Address Validation – Canada). As for credit card transactions, there are varying but very similar versions of Address Verification Service (AVS) created by most major credit card issuers in the US and other countries to use with their authorization process. Here are some key differences in the way these two systems work:
Address Validation – US is a CASS CertifiedTM service that links directly with up-to-date USPS address data, together with other authoritative data sources, to verify – and if necessary, correct – a supplied delivery address. Address Validation – US also goes far beyond simple street address checking, including Delivery Point Validation (DPV) to make sure an address is deliverable, verifying suite numbers, and flagging residential versus business addresses.
AVS, by comparison, checks an address against the one on file with the issuer of the credit card being authorized. As this article describes in detail, AVS only compares the numerical portion of a street address and the ZIP code against a credit card provider’s records. It then either approves the address or returns one of several error codes, outlined in this Wikipedia summary.
When to use Address Validation and AVS
So, should you use Address Validation or AVS for credit card transactions? The answer is that both are very important, depending on your situation. Here’s why:
- Using AVS with unvalidated addresses can lead to false negatives that decline legitimate sales and lose business. Validating an address before submitting to AVS can help prevent false-negatives.
- AVS doesn’t guarantee deliverability – so a misspelled street or city name could still leave your package lost at the wrong address or loading dock, causing financial losses as well as possible brand damage from unhappy customers. Address Validation checks and corrects for deliverability.
The best of both worlds
With thoughtful business logic, you can harness the strengths of Address Validation to correct addresses BEFORE submitting them for authorization, decreasing the number of false negatives. This increases sales and provides confidence in declined authorization attempts. In addition, incorporating contact-data-hygiene best practices that ensure the address provided is accurate and deliverable reduces the cost of mis-shipped products and increases customer satisfaction.
Managing credit card transactions
It is important to understand that there are multiple approaches to managing your credit card transactions, including both automated tools and human approval procedures (we devoted an entire article to this recently), including our own BIN validation capabilities for checking credit card types and validity. Every strategy has its pros and cons, and there is always a balance between preventing fraud and chasing away valid sales and customers.
Need to take a deeper dive into credit card processing and data quality? Contact our knowledgeable product experts anytime, and we’ll be happy to discuss your own situation in more detail.