Why Does Avs Decline A Transaction?
The Address Verification Service (AVS) is a fraud prevention system used by credit card issuers to screen card-not-present transactions for high risk activity. AVS works by comparing the billing address provided by the customer with the address the card issuer has on file. If the addresses do not match, AVS will decline the transaction as potentially fraudulent. The goal of AVS is to reduce fraud by stopping high-risk transactions before they are processed and funds are disbursed.
When a customer makes an online or phone purchase using a credit card, AVS checks to see whether the street number, street address, and postal code match the billing address associated with the account. If any component does not match, AVS will recommend the merchant decline the transaction to avoid the risk of fraud. By screening transactions and declining those deemed suspicious, AVS aims to protect merchants, issuers, and legitimate customers from fraudulent charges.
Data Mismatch
The most common reason for an AVS decline is a data mismatch between the billing/shipping address entered and the address on file with the card issuer. This occurs when the address provided does not match the bank’s records, resulting in an AVS mismatch.
There are a few examples of data mismatches that can trigger a decline:
- Typos or spelling errors in the billing/shipping address
- Using a nickname vs full legal name in the address
- Entering a new or old address that has not been updated with the card issuer
- Using a work address instead of a home address (or vice versa)
- Errors in the street number, street name, or apartment number
The billing and shipping addresses must match exactly what the bank has on file. Even small differences can result in the transaction being flagged as high risk and declined due to an AVS mismatch.
High Risk Countries
AVS will decline transactions originating from countries that are deemed high risk for fraud. For example, Nigeria is considered a high fraud risk country. According to Checkout.com, Nigeria sees ecommerce fraud rates over 10x higher than the global average (Source). In 2021, Nigeria accounted for 24% of global ecommerce fraud, despite representing only 1% of global transactions. Due to the high instances of fraud from Nigeria, AVS will automatically decline any transactions originating from the country. This helps merchants avoid dealing with excessive chargebacks and fraud from these high risk nations.
By blocking transactions from countries with known high fraud rates, AVS aims to protect merchants and consumers from potential financial losses. While there may be some legitimate transactions occasionally declined, the overall benefit is reducing fraud exposure for merchants. The countries classified as high risk by AVS can change over time based on the latest fraud statistics and data.
Maximum Purchase Amount
Banks set a maximum purchase threshold on credit and debit cards to prevent fraudulent transactions. If a purchase amount exceeds this threshold, the bank will automatically decline the transaction as a protective measure. The exact maximum purchase amount varies between banks and card types.
For example, some banks set maximum purchase amounts between $100-$500 for debit cards, and $1000-$5000 for credit cards. Purchases over these limits may trigger an automatic decline, even if there are sufficient funds available. This is because large transaction amounts can indicate a fraudulent purchase on a stolen card.
To avoid max purchase amount declines, merchants should inform customers of any transaction limits in advance. Customers can also contact their bank to check or increase their maximum purchase limit if needed. However, banks typically cannot remove this limit entirely due to fraud prevention policies.
Negative Customer History
Sometimes a transaction is declined due to negative details in the customer’s previous transaction history with the merchant or other merchants. If a customer has a pattern of fraudulent purchases, disputed charges, or excessive refunds and chargebacks, their future transactions may be automatically declined as a fraud prevention measure. According to one source, previous suspicious activity like disputes or chargebacks on an account can lead to future transactions being declined due to an AVS mismatch.
Merchants can maintain negative customer lists based on fraud risk factors like previous chargebacks. They may also subscribe to services that track high risk customers across multiple merchants. If a customer has had transactions flagged as fraudulent before, their data gets logged in these systems. Their future transactions will then be automatically declined if the merchant has enabled such fraud filters. This protects merchants from repeat fraud offenders.
Multiple Transactions
A high number of transactions in a short period of time, especially across borders, may trigger an AVS decline. This is because multiple transactions from the same account, especially if they occur rapidly, can raise suspicions of fraudulent activity.
For example, if the cardholder usually only makes domestic purchases with their card, but then suddenly makes multiple international transactions in quick succession, the sharp increase in transaction volume and cross-border activity may prompt an AVS mismatch. The issuing bank’s fraud detection system may automatically see this as outside of the normal spending pattern and decline the transaction as a protective measure.
Merchants can avoid declines in situations like these by being aware of sudden spikes in transactions from a single account, which could signal a fraud attempt. Verifying with the legitimate cardholder that they did indeed initiate the transactions can clear up any mismatches. Merchants can also discuss adjusting fraud filter thresholds with their processor if legitimate transactions are being incorrectly flagged. According to one source, “If you notice transactions are frequently being flagged in error, you may need to contact your merchant services provider to adjust settings.” (Source)
New Customer
Transactions from new customers with no purchase history often present higher risk and may be declined. Payment processors are wary of fraud from first-time customers, as they have no way to establish trust or verify identity. According to one study, new customers accounted for over 60% of ecommerce fraud. Without an existing relationship or profile, processors cannot accurately assess the legitimacy of transactions. As a result, initial purchases – especially those over certain dollar thresholds – may trigger fraud prevention filters and result in a decline. Providers state this protects merchants from bad transactions while customers build a verified profile.
Error Codes
The Address Verification System (AVS) uses error codes to indicate why a transaction was declined. Understanding these codes can help customers address issues to successfully complete future purchases. Here are some common AVS error codes, reasons, and solutions:
| Error Code | Meaning | Solution |
|---|---|---|
| N | No match on address or zip code | Double check billing address and zip code entered |
| Z | Zip code only match | Ensure billing address matches card records |
| U | Address unavailable | Provide full billing address and zip code |
| G | Non-U.S. transaction | International transactions can’t be AVS verified |
Understanding AVS codes helps customers fix issues on their end to successfully process future transactions.
Prevention
There are several steps customers can take to help prevent transactions from being declined due to an AVS mismatch:
First, customers should double check that their billing information is accurate and matches exactly what is on file with their bank before submitting an order. Even small typos can trigger an AVS mismatch. It’s important all address fields, especially zip code, are entered correctly (Source 1).
Second, if customers will be traveling while making purchases, they should alert their bank in advance. Banks can put travel notices on customers’ accounts so transactions from other locations are less likely to be flagged as fraudulent (Source 3).
Third, when using a new payment method, customers should consider starting with smaller purchases and building up a positive transaction history. This establishes trust and may help avoid declines on larger future purchases (Source 2).
Following these tips can help reduce the chances of AVS mismatch declines. However, if a transaction is still rejected, customers should follow up with their bank directly to understand the specific policies and security settings on their account.
Conclusion
AVS decline codes are an important tool for merchants to prevent fraudulent transactions while minimizing disruption to legitimate customers. The key reasons that can trigger an AVS decline are data mismatches between the customer’s billing and shipping information, high risk countries, exceeding maximum purchase amounts, negative customer history, multiple rapid transactions, and new customers without established records. While declines help stop fraud, merchants should aim to reduce false positives through address verification optimization, whitelisting reputable customers, and leveraging tools like device fingerprinting. The most effective fraud systems use layered defenses, combining AVS with other signals to separate the fraudulent minority from the majority of real sales. With balanced policies in place, merchants can facilitate more accepted transactions while still guarding against abuse.
