Using an Address Verification System (AVS) when processing your online credit card transactions can help to reduce the number of fraudulent transactions you receive. However, most online merchants dont know that using AVS can also reduce your number of legitimate orders. Using AVS can hurt your conversion rates in two main ways. 1. If you set your AVS rules to reject all transactions that do not match both street address and zip code, you may be loosing legitimate sales from customers who do not understand that the billing address needs to match the address that their credit card statement is mailed to. 2. The more troublesome problem with AVS occurs when your customer has recently moved. Even if you update your billing address with your credit card company after you move, it can take up to 6 months or longer for them to update the AVS database with your new information (even though they make sure that the bill arrives at the right address!) The worst part about this delay is that often customers will blame the merchant if their card gets rejected for this reason. If their credit card bill arrives at the right address, they assume that their credit card company updated their information. When a card that they know should work gets rejected by your website, they often become angry with you, not their card provider! This happened to me recently. I moved my family into a larger home over eight months ago and the debit card that I use for most of my online purchases still gets rejected unless I use my old billing address, even though the bank statement has come to our new address from day one! The solution to the first problem is quite easy. Simply make sure that you use a statement near your Billing Address fields telling your customers something along the lines of, To speed processing of your order, please ensure your billing address matches the address on your credit card statement. Include this type of statement near your Billing Address fields and your AVS matches will improve. In markets with historically low attempted fraud rates, you can also try loosening your AVS rules a bit. Most AVS systems check both the number in the street address and the zip code. By setting your AVS rules to accept transactions that match for only one of the two AVS numbers, but still rejecting transactions that do not match for both, you can improve the number of successful transactions. If you attempted fraud rate is very low you can even try accepting transactions that fail both AVS checks, but flag the transactions for additional follow up before shipping. Before loosening your AVS rules, you need to understand that most merchant account providers classify transactions that do not match for both street address and zip code as non-qualified transactions. These transactions usually get charged a higher discount rate than your normal discount rate. Depending on you merchant account agreement this penalty can add up to an additional 2% above your normal discount rate, so check with your merchant account provider before accepting no match transactions. The solution to the second problem take a little bit more work to implement, however it can significantly reduce the number of AVS mismatches you receive. For this solution you can keep your AVS system set to reject no match transactions, however you need to modify your Card Rejected error page to include a brief educational statement, such as the one below. Were sorry, your credit card has been declined. This can happen for several reasons. Your billing address* should match the address on your credit card statement. Please check your billing address, card number and expiration date and try again. *NOTE: If you have recently moved, your credit card company may not have updated your billing address in their Address Verification Database. It can take up to 6 months or longer for some credit card companies to update your address, even if they send your bill to your new address. If you have recently moved, try using your previous billing address when you check out. By making just a few changes in the way you use AVS at your web site and by educating your customers about address verification, you can boost your conversion rates and sales, while lowering your merchant account fees! Copyright 2004 Eric Graham |
