AVS is short for Address Verification System.
During checkout, the customer provides their billing address. This is the address that their credit or debit card should be registered with their bank.
AVS helps verify that the self reported billing address during checkout matches the actual billing address registered with the customer's bank. However it's not as stringent as this may sound.
During the authorization of the charge to the card, the payment processor will report the billing address to the issuing bank of the card. If AVS is enabled for the transaction, then the street number and zip code from the self reported billing address will be compared against the actual address registered with the bank.
AVS will not verify:
Why is this? Because when the AVS system was invented, capabilities of accurately "fuzzy" matching text were not nearly as sophisticated as we have today. AVS only relies on exact matching of numbers. So therefore, the street number and zip code are the only number fields available to compare against.
Verifying addresses may sound simple, but consider that even the name field is complex. For example, some customers may use a nickname or shortened name in the billing address. Or perhaps this is a B2B wholesale order with many card holders on file. The sensitivity of matching is highly subjective, and would require a more complex system.
Therefore, AVS is the simplest and fastest form of address verification possible.
The AVS verification results are simple codes:
Y - Full match (street number & zip code match)A - Street number matches, zip does notZ - Zip matches, street number does notN - Neither street number nor zip matchesU - Address unavailable (potentially from a pre-paid debit card that has no registration data available)Typically, the merchant has configurable rules to decide how to handle these various cases. Some merchants may elect to manually review the non-matching transactions, others may decide to outright reject all non-matching transactions because of a high risk of fraud.
Additionally, some banks may consider AVS results as part of the chargeback dispute process. Showing that the cardholder's billing address matches their actual registered address helps prove their identity and intent to purchase. Depending on the chargeback reason code of course.
If you're using Shopify Payments as your payments provider, then you can enable AVS verification from within the Payments setting of your Shopify Admin.
Important: Shopify is disabling AVS by default starting September 26th, 2025. If you currently rely on AVS protection, make sure to opt out of this change before September 6th to maintain your current settings.
Each payment processor provides their own dashboard, app or plugin to allow you to manage the settings for your account. From within your payment processor, you can enable AVS verification and configure rules to how you'd like to respond to failed verifications.
When it comes to proving that the customer is in fact the card holder, AVS provides a simple, fast and free option to help add a bit more certainty to the transaction. However, it doesn't completely idemnify merchants from the risk of chargebacks, real or fraudulent.
It doesn't even truly verify the details of the address that deeply, or consider the customer's real world location at the time of the transaction. However, it is a small piece of evidence that can be used to determine if the customer at least knows the basic information of the account on file. A simple credit card number and CVV number would not reveal those details alone.