The Significance of Address Verification in E-commerce Industry
With the advancement in technology, everything has been turned digital. Through money transactions to e-commerce, the digital era has helped people perform their activities with a single device. This has no doubt increased the convenience of the people. But at the same time, a number of negative outcomes have also arisen. Frauds, hacks, and identity thefts are such outcomes that have not only profited from the technology but have become much more advanced.
This is why, in order to combat these frauds, proper verification checks are put in place by organizations. These verification checks provide security to the organization as well as consumers. But at the same time, they often lower the customer experience level. Research has shown that on several occasions, almost 1 in 3 customers abandon their shopping cart due to complicated checkout related to address issues.
In order to make sure customers are happy with the security checks put in place, it is crucial to have a reliable and robust online address verification system (AVS) out in place.
What is an Address Verification System?
An Address Verification System (AVS) is a tool that is used to accurately verify a customer’s address. The customer is asked to enter the address and the system checks to verify whether the entered address matched with their registered address. Through this practice, e-commerce stores have been able to restrict checkout errors which in turn enhances conversion rates.
How Does it Work?
The Address Verification Service checks the address submitted by the card user with the cardholder’s billing address on record at the issuing bank. This is done to verify the authenticity of the credit card transaction. The credit card processor or the issuing bank sends a response to the merchant indicating the degree of address match. The merchant will then decide if the credit card transaction should be accepted or declined.
What is Asked from the Customer for Address Verification?
In most cases, the client is required to upload a Proof of Address document which contains the personal and residential data of the client. The document should have some particular information like the full name of the client, their residence address, date of issue, etc.
Some of the common documents that can be presented as proof of address include:
Utility bill of the habitation specified by the user
Credit card statement
Dated bank statement which should not be older than 2 or 3 months
Any government-issued correspondence
Employer’s certificate for proof of residence
House purchase/lease documents
There can be some supplementary documents that can be submitted depending on the requirements of different banks and their policies.
Importance of Address Verification Systems
There are a number of benefits of address verification systems. One of the biggest advantages is to combat frauds like identity thefts by knowing your customer and authenticating their identities.
Inherent Part of KYC
Address verification systems are an integral part of KYC solutions. According to the USA Patriot Act, financial institutions have to verify the identity of the individuals wanting to conduct financial transactions with them. One part of identity verification is to verify the address of the customers. Through online address verification, the eCommerce industry is able to comply with KYC regulations easily.
In recent years, frauds including credit card frauds, identity thefts, etc. have been on the rise. In order to combat these frauds, it becomes essential for online e-commerce stores to put proper verification checks in place. Through these checks, a number of frauds can be mitigated.
Reduced Loss of Revenue
Another important reason for the implementation of the address verification services is the reduced loss of revenue. When a failed delivery occurs due to an incorrect address, it results in the loss of revenues. Another case of chargeback fraud should be noted. In this case, someone purchases something using a stolen credit card. The retailer has to pay the money back to the original cardholder as a chargeback. Through address verification services, these kinds of instances are avoided.
Improved customer experience
It is very important for a business to keep their customers happy and satisfied. A factor that greatly impacts business is its ability to retain its customers. With robust and dependable AVS, deliveries are successful and frauds are mitigated.