How AVS Works
When you manually enter a sale into your terminal, virtual terminal, or your PC software program it will prompt for the customer's address and zip code. You will key enter the street number (example - 123 if the address is 123 Main Street and then the five or nine digit zip code). The terminal will dial out for an approval and the zip code and numeric billing address will be compared with the physical address to which a cardholders Visa or MasterCard is registered. Once this information is verified, the merchant will receive a response to the AVS request as to the validity of the address. The AVS code will be displayed on your terminal display screen and an AVS code or message indicator will also appear on the customer's receipt.
The AVS response codes and their definitions are as follows:
| X | Exact match, address and 9 digit zip code |
| Y | Exact match, address and 5 digit zip code |
| A | Address matches, zip code does not |
| W | 9 digit zip code matches, address does not |
| Z | 5 digit zip code matches, address does not |
| N | Address and xip code do not match |
| U | Address information is unavailable |
| R | Retry, system is unavailable |
| S | Service not supported |
| E | Data not available / Error invalid |
The transaction may be approved even if the AVS information does not match! Each merchant will need to check all AVS responses to find out if the address is good. THE TRANSACTION WILL NOT BE DECLINED BECAUSE THE AVS INFORMATION DOES NOT MATCH.
Merchants are NOT be penalized if any of the AVS information is incorrect. However, each merchant does face a greater chance of chargebacks if he/she decides to accept the sale on a questionable match.
AVS is designed to give the merchant additional information to raise the comfort level of the merchant prior to shipping product when taking credit card orders over the phone or through the mail. It is used as extra protection when accepting a purchase in person when the magnetic stripe of the card is unreadable. Merchants who do not perform Address Verification are charged a higher discount rate on those particular transactions and will see it broken out separately on their merchant statement. All processors charge more for manually keyed transactions without AVS.
It is very important to remember that whenever you swipe a card through the terminal and the magnetic stripe is unreadable that you MUST manually imprint the customer's card with a manual imprinter and have the customer sign the manual sales draft, otherwise you automatically lose your chargeback rights if there is a customer dispute or retrieval request.