Online Address Verification: Mitigation of Card-Not-Present Fraud


Payments through credit/debit cards have become a norm these days. Credit/debit cards have provided easy cashless and secure payment options. Be it online shopping or onsite purchases, all the businesses are now accepting credit/debit cards. With the rise in the usability of card payments, frauds have also risen. Now fraudsters use more sophisticated tactics for fraud. They steal the personal and financial information of the customers through phishing and other social engineering practices. This information is later used for identity frauds like account takeovers.

Address Verification for Mitigation of Card Payment Frauds

One of the most popular credit card frauds is card-not-present fraud. This fraud is done during online shopping or telephone payments. Card-not-present fraud increased from 1.02 million in the financial year 2016/17 to 1.8 million in the financial year 2017/18, Australian Payments Network reported. Fraudster enters the stolen card number on the e-commerce website. This was very tough to point out because the salesperson can’t physically confirm the card details. He can’t verify if it belongs to the same person who is claiming its ownership. In physical payment, the seller can check the authenticity of the card by looking at its holograms and account number. Then CVV was introduced to resist card-not-present fraud. The customer also has to tell the Card Verification Value (CVV), which is present at the backside of the card.

Unfortunately, fraudsters bypass this security with advanced hacking techniques. They steal the CVV number along with the card number. When a card is not present, address verification can help to mitigate payment fraud more efficiently. The customer has to tell his address while making an online card payment. The address is matched with the address on the credit card issuer provided information.

Pro and Cons of Address Verification

Let’s understand in which cases an address verification system can help and in which it can’t.

  • Let’s suppose a fraudster has stolen a credit card number, user’s name, and CVV number also through hacking. It may seem that now he can commit fraud easily. But if the merchant is using the address verification, the fraudster also has to provide the address associated with it.
  • In another case, the credit card is stolen physically. Now the fraudster has a card and CVV number, but not the address. Then the fraudster tries to make an online payment. The merchant will demand an address from the fraudster which he doesn’t have, ultimately dropping his purchase.
  • In an unlucky case, the fraudster has stolen a credit card and id card. Now the fraudster has address information also. He can bypass the address verification easily by giving the address on the id card.

In all the above cases, the victim can claim chargeback from the credit card issuer and the merchant. He can also win the chargeback because the merchant did not use an advanced identity and address verification system.

Online Address Verification

The most extended address verification uses an identity verification system. With both of these verifications, the chances of credit/debit card fraud can be minimized. It verifies the identity and addresses of that identity to give accurate verification results.

How does it work?

  1. The user upload/click his picture carrying an identity document
  2. The face of the user is verified with the image on the document
  3. The address document’s image is uploaded
  4. The data on the document is extracted and analyzed
  5. The merchant and customer are notified of the results (Verified or Failed)

Address documents can be utility bills, employee letters, bank statements, or insurance certificates. In the case of credit cards, the address will be verified with the card provider’s information.

Benefits of Address Validation

Reduce Frauds

Online address verification provides two layers of security by verifying addresses against identities. So the risk of fraud lessens if the fraudster has a credit card and id card also. The online address verification system will verify the customer’s identity through the identity verification process. Identity verification is also known as Know Your Customer (KYC). It confirms the identity of the customer or client through multiple checks.

Fewer Chargebacks

Invesp reported that in 2016 the e-commerce industry lost $6.7 billion as a result of chargebacks. Online address verification will reduce the number of card-not-present fraud, thus decreasing the chargeback claims also.


After all the discussion, it is clear that online address verification is the need of all businesses. In this modern-day, the security of customer information is a crucial task. Fraudsters always look for loopholes in the system to get financial benefits. Online address verification will help to block the attempts of payment fraud while giving the best customer services at the time.

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