In the online world, merchants usually have an alternative to signature for authenticating credit card transactions. Currently there are 2 methods, the CVV (Credit Verification Value) and the AVS (Address Verification System). This article will explore each one of these methods, and will give you an idea and an opinion about which one is the best.
AVS, or Address Verification System, is a method to authenticate a credit card purchase based on the billing address. The billing address supplied should be the same address that is displayed on the credit card bill. The security protection of this method is obvious, as usually credit card fraud happens from another country overseas, where the person using the credit card has only the credit card number, and nothing else. The problem is, however, that this method can block legitimate purchases, as people often mistype their address, or in some cases, they change their address, and the credit card information is not fully updated or propagated. What’s even worse is that the banks, in case of an AVS error, put a 72 hour hold on the amount of the transaction (so imagine the magnitude of this if a legitimate client had multiple AVS errors, which usually the case). Additionally, it seems that some transactions are not authenticated against the AVS at all. I remember one transaction that I saw that had “123 Go Away” as the address and yet it was authenticated.
On the other hand, CVV, or Credit Verification Value, is a method to authenticate a credit card purchase based on the 3-4 digit number that appears on the back (VISA, MasterCard, Discover) or on the front (AMEX) of the credit card. Usually only the person holding this credit card has access to this number (Credit Card companies have strict rules against saving the CVV in the merchant’s database). The advantage of the CVV is that it’s a number, and it’s written on the credit card itself, so it’s very easy for the people to type it in, and the error margin is usually low. What’s more exciting is that the CVV authentication nearly reduces fraud to 0, as it’s very rare for the person committing the fraud to have the CVV (unless, of course, the credit card is stolen and not yet reported). The only disadvantage of the CVV is that some people don’t even know where to find it; however, almost all purchase forms right now have a small picture illustrating where to find the CVV. Keep in mind that the policy of holding the money in case of a failed purchased also applies to transactions authenticated against the CVV, nevertheless, the magnitude of this is negligible compared to that of the AVS, as people tend to make much less mistakes when writing a 3-4 digit number than to writing a complete address.
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