AVS Mismatch Woes
It’s an awkward situation when you have to inform a customer their card has been declined. The customer will usually insist it must be some mistake on your end, but after several attempts at trying, you have to tell them you believe their card is the problem.
Address Verification System (AVS) is a fraud-prevention measure implemented on card-not-present transactions like e-commerce and phone orders. AVS works by entering the cardholders billing address and zip code during the transaction. When a transaction gets declined due to an AVS mismatch it can be particularly tricky.
Here are a few scenarios that trigger an AVS decline and how to rectify them.
AVS Mismatch No. 1: A customer is making a purchase, but there’s an AVS mismatch between the address or ZIP code. The transaction is declined in your payment gateway, but the customer notices the purchase in his pending transactions. The business owner believes the transaction didn’t go through, but the customer’s bank says it did.
Important to note: While the issuing banks benefit from fraud-prevention measures like AVS, they’ll still approve transactions even when AVS mismatches occur. It is the business owner himself that sets the settings to decline transactions based on AVS mismatch.
In essence, the transaction is approved by the issuing bank but is declined by the business owners payment system.
Businesses have three options in this scenario:
- Try again in case information was entered incorrectly.
- Override the system to approve the transaction.
- Cancel the transaction.
It’s best to cancel the transaction if you don’t know the customer to avoid a potentially fraudulent transaction. If you know and trust the customer, you’re welcome to override the system, but doing so will incur a higher transaction rate that accounts for risk. If you rerun the transaction and it continues to fail, it will create more pending transactions on the customer’s credit card statement and more declines on your end, simply exacerbating the problem (though the mixup will be resolved when you settle the day’s transactions. Once settled, the pending charges usually clear within 24 hours.)
AVS Mismatch No. 2: A customer provides a true billing address, but an AVS decline occurs. The cardholder swears the information was updated with the issuing bank, but there are two reasons the bank records still might not match the address provided.
- P.O. Boxes
If the customer provides a P.O. Box, a mismatch can occur if the bank does not commit to the same recording practices as the Merchant Account Provider. It’s considered a best practice to truncate the “P.O. Box” and simply verify the numbers provided. But not all banks do that, which results in mismatches of “123” and “POB,” for instance.
The cardholder can resolve this problem by calling the issuing bank and informing it that the P.O. Box is entered incorrectly for verification purposes.
- Mailing Address Update
Updating your mailing address is top of mind after a move, but that’s not enough to avoid an AVS decline. Updating a mailing address will ensure credit card statements reach the new home, but that’s it; the billing information for the card isn’t automatically changed.
The cardholder simply needs to contact the card’s issuing bank, request an update to the billing address and move forward with the payment.
In summation, here’s a quick cheat sheet for dealing with AVS declines on the fly:
If you know the customer, reduce the hassle and continue with the payment.
If you don’t know the customer, consider retrying if you potentially entered the information incorrectly over the phone. For e-commerce transactions, consider canceling the transaction entirely to prevent fraud.
Explain to the customer that the transaction isn’t actually approved, despite what the bank might be saying.
If a customer swears up and down that the information is correct, inform the customer of the P.O. Box issue if applicable. If that isn’t the issue, ask whether the customer recently updated the billing address.
Happy Tuesday & Happy Selling!
Kevin