by Jackie Hollenkamp Bentley
When Alexander Graham Bell obtained his official telephone patent in 1876, there likely wasn’t a single person around who envisioned the communication device as an instrument of billions of dollars of commerce transactions.
Yet, here we are, and that telephone has become a valuable resource for business owners in processing transactions when face-to-face dealings are not an option.
Alas, there is a dark side to this convenience: fraud.
According to an August 2015 article by The Nilson Report, total credit card losses due to fraud totaled more than $16 billion worldwide, and a good chunk of that is a result of mail order and telephone order deception. Fraudsters are now migrating more toward these types of transactions thanks to the roll-out of EMV technology (also known as chip-enabled credit and debit cards).
Fortunately, there are ways to protect business owners from such chicanery. The two most important methods are using an Address Verification System (AVS) and a CVC Match.
While inputting a customer’s credit card information into iCheckGateway.com’s Online Terminal, business owners can request their address as well as the CVC code on the back of most credit cards (American Express cards print the four-digit CVC code on the front).
The beauty of an AVS system is that it will return a response code letting the merchant know if the address is valid or if there are discrepancies.
Once the payment is processed, these codes are part of the transaction details in iCheckGateway.com. The transaction will still process regardless of the code results; however, the response codes provided can inform the merchant of any discrepancies and allow the merchant to determine if they wish to proceed with the transaction. The merchant would have the opportunity to void the transaction before the transaction batches. Keep in mind, there are several reasons which could cause the AVS to fail for a valid transaction, such as the customer has recently moved and the AVS system has not been updated to reflect the new address.
Here is a list of AVS response codes merchants may see once the transaction goes through:
A = Address (Street) matches, Zip code does not
B = Street address matches, Postal code in wrong format (international issuer)
C = Street address and postal code in wrong formats
D = Street address and postal code match (international issuer)
E = AVS Error
F = Address does compare and 5-digit ZIP code does compare (UK only)
G = Card issued by a non-US issuer that does not participate in the AVS System
I = Address information not verified by international issuer
M = Street Address and Postal code match (international issuer)
N = No Match on Address (Street) or Zip
P = Postal codes match, Street address not verified due to incompatible formats
R = Retry, System unavailable or Timed out
S = Service not supported by Issuer
U = Address information is unavailable (domestic issuer)
W = 9-digit Zip matches, Address (Street) does not
X = Exact AVS Match
Y = Address (Street) and 5-digit Zip match
Z = 5-digit Zip matches, Address (Street) does not
Verifying credit card using the CVC method gives the merchant added assurance that if a customer can provide the code (also known as CSC, CVD, CVVC, CVC2, V-CODE, or CCV), there is a higher chance that the person has the card in hand.
Once processed, look for these responses in the Online Terminal:
M = CVV2 Match
N = CVV2 No Match
P = Not Processed
S = Issuer indicates that CVV2 data should be present on the card, but the merchant has indicated that the CVV2 data is not present on the card
U = Issuer has not certified for CVV2 or Issuer has not provided Visa with the CVV2 encryption Keys
Elavon, one of iCheckGateway.com’s credit card processors, has offered several tips to help merchants protect themselves against criminals. Namely, watch out for customers who make purchases without regard for quantity, prices and other key aspects; uses a shipping address that’s different than the address on file for the credit card; or uses a card issued in the United States, yet requests that the merchandise be shipped to locations outside the country. These are but a few red flags to look for when processing transactions.
Armed with the AVS and CVC verification methods, a vigilant eye, and just plain common sense, a merchant can protect itself from the growing, ugly specter of fraud.