What is AVS Rejection and Why Do They Happen?

What is AVS Rejection and Why Do They Happen?
By max May 12, 2023

The most challenging situation for any cardholder is to fill in the checkout page only to realize that their transactions were declined because of incorrect card details. There can be many reasons why your transactions might fail. One such issue is the AVS rejection. AVS stands for the Address Verification System which serves as an added layer of protection for merchants and cardholders.

Card-not-present frauds are on the rise recently. In the first two quarters of 2022, around 230,937 cases of card fraud were reported. The risk is particularly higher for merchants accepting card-not-present transactions, as a fraudster only needs the card number and a few additional details to process the transaction. A thief who’s stolen a credit card might know the numbers, but they might not know the cardholder’s address. That’s where the AVS mismatch comes into the picture. Below we have shared all you should know about what is AVS rejection, how it happens, the benefits, and more. Keep reading.

What is AVS Rejection?

The Address Verification System compares the address details entered by the customer during the transaction with the details submitted to the card issuer. Transactions are declined if the two addresses do not match. Put simply, AVS ensures that transactions are processed only when the cardholder enters the correct billing address details during checkout. The address verification is composed of two main components—the street address and the zip code of the customer. If any of this information is inaccurate, the transaction is declined.

What is AVS Rejection

While AVS mismatch can prevent many fraudulent transactions where the fraudster doesn’t have access to the cardholder’s personal information, it doesn’t guarantee protection from all fraudulent transactions. That’s simply because a fraudster can be someone with access to the cardholder’s address. If that’s the case, they might enter their street number and zip code to complete the transaction.

AVS Rejection – How Does it Work?

When a cardholder enters their card details, they are supposed to mention the address. Once they submit the details, the payment processor requests the address approval. It’s done to match the address entered with the information on file at the issuing bank. The transaction is marked successful if the entered details match the address held by the issuing bank. If not, the transaction request is declined by the bank.

AVS Rejection - How Does it Work

As mentioned above, the customer’s zip code as well as the street/house number has to match to complete the transaction. When your AVS is checked, one of the following outcomes takes place:

  • AVS Match: The address entered by the cardholder has matched the address in the bank records successfully.
  • AVS Partial Match: The address entered matches partially, i.e. either the street number of their zip code is correct.
  • AVS Mismatch: Neither of the two (street number and zip code) matches the correct address details.


AVS is not only necessary for the cardholder, but it’s equally important for the merchant. Transactions processed through credit cards can be reversed if the cardholder issues a chargeback request on noticing an unauthorized transaction on their credit card statement. This increases the chargeback ratio for the merchant and also incurs a chargeback fee if the merchant decides to fight the chargeback.

Pros and Cons of AVS Filter

Accepting online payments can be a real headache for the merchant, as there’s always a risk of chargebacks and fraudulent activities. The increased number of chargebacks and fraud activities can put your merchant account at risk of termination. AVS, like CVV and other security tools, enhances the security for the cardholder, but it comes with its share of drawbacks. Let’s weigh the pros and cons of AVS Rejection to see whether it’s reliable for your business.


  • Reduced Risk of Fraudulent Activity: A fraudster might steal your credit card and enter the number, CVV, and other details to misuse your card for shopping. With an AVS mismatch function, it gets tricky for the fraudster to bypass this security protocol. Since address details are not mentioned on the card, it’s highly unlikely that the fraudster can track this information.
  • Fewer Chargebacks: Card-not-present fraud is one of the many causes of the chargeback dispute raised by the cardholder. It’s obvious that a customer will file a chargeback for transactions they have not authorized. The merchant doesn’t only have to issue a refund, but this may result in an increased chargeback ratio, which might affect the merchant’s credibility and increase the risk of their account getting terminated.
  • Quick Transaction Processing: AVS might be an additional step for the customer entering their card details either at retail stores or online, but it’s super quick. The cardholder won’t face any trouble entering their zip code and house number. The AVS is approved as soon as the details match the information held by your card issuer, which happens fairly quickly.
  • Affordable: AVS does cost a small fee for all transactions, but it’s quite negligible. It’s much better to implement their personal detail verification filter for all transactions than issuing the refund or adding another chargeback to your account.


  • Not for All Fraudulent Activities: Address verification prevents the risk of fraud for card-not-present transactions, especially when the card is stolen and the fraudster has all the details on the card. However, this security protocol doesn’t work if the fraudster knows the address of the cardholder. They can easily bypass AVS security by mentioning the correct house number and street code, resulting in a successful transaction.
  • It Prevents Legitimate Transaction: There’s a risk of a false decline, which happens when the cardholder processing a legitimate transaction gets a “transaction declined” alert for entering the incorrect address. This mostly happens when the customer forgets to update their new address with the card issuing bank. They may have to enter all the details all over again if the transaction fails due to the wrong address input.
  • Increased Complaints: Customers will write negative reviews if their legitimate transaction is declined. They might also not use other payment methods to process the transaction.

How to Fix the AVS Mismatch Error?

Dealing with the AVS mismatch depends on the merchant’s risk tolerance. You might choose to implement any of the following.

  • Approve It: If the customer’s address details mismatch with the address data held by the issuing bank, the merchant can contact the customer to obtain more information that suggests the user is the actual cardholder. While this may reduce customers’ frustration by processing the transaction despite their incorrect address details, it increases the risk of business exposure to scams.
  • Reprocess the Transaction: If a merchant believes the customer has mistakenly entered the wrong address, they can choose to reprocess the transaction. The customer gets another attempt to rectify the details. If they input the address correctly this time, the transaction will be processed.
  • Cancel the Order: The last option is canceling the order. If the customer fails to provide the accurate address details, you can decline the transaction without giving them additional attempts. This is the safest option for merchants and cardholders, but if it’s an authentic cardholder trying to process a transaction, they might get frustrated by the canceled order.

Using robust fraud controls is essential if you want to offer the best security to your customers. At the same time, their convenience and satisfaction must be your priority. If the transactions are declined repeatedly, the customer might go elsewhere for shopping. It’s the customer’s responsibility to update their new address details with the card issuer as and when required.

What Fraud Can Bypass AVS Filter?

As mentioned above, certain types of fraud can occur despite the AVS protocol in place. For instance, friendly fraud can bypass the AVS filter easily. It occurs when a customer files an illegitimate chargeback for an authentic transaction. They might claim that the transaction was executed by a fraudster or they never received the package. In either case, the customer is the real owner of the card and can input the correct address details, bypassing the AVS filter.

Another risk is pretty obvious. An experienced fraudster might know the security system and will do their best to collect the personal details of the cardholder, including their address to avoid failed transactions. Unfortunately, AVS can only detect fraud based on the address details. If the details are correct, it will pass the transaction.

In addition to these two issues, AVS doesn’t verify other details. When a credit card is stolen, all that the fraudster needs is the address information of the cardholder, which can be extracted easily if the fraudster knows the cardholder. That’s it! They can bypass this security system without any difficulty.

Bottom Line

The address verification system protects merchants and cardholders from fraudulent transactions by verifying the input address. The information is compared with the address data saved in the bank’s record. The transaction is declined if there’s a mismatch. Implement AVS fraud protection and enhance the security of your transaction processing system. Not only will it build customers’ trust in your business, but AVS leads to fewer chargebacks and improved security.