For card not present transactions (including those conducted over the internet) the way to get the best interchange rate is to do address verification.  Address verification involves entering the customers’ address and transmitting it across the processing network, where it is compared with the customer’s address on file with his/her credit card company. A response code is returned to tell the merchant if the address was a full match, partial match or not a match.

Interestingly, getting a better interchange rate is not dependent on the address matching, rather, it is dependent on attempting to match the address.  However, usually it doesn’t make sense to actually accept a payment where the address doesn’t at least partially match because it is almost certainly fraudulent (remember, when the customer doesn’t sign the merchant bears responsibility for fraudulent and charged-back transactions).

Here are the AVS codes and what they mean:

• X – Street address and 9 digit ZIP code both match
• Y – Street address and 5-digit zip code both match
• A – Street address matches but zip code does not match
• W – Zip (9 digit) matches but street address does not match
• Z – zip (5 digit) matches but street address does not match
• N – No match on either zip or street address
• U – system unavailable.  This is the code that will always be returned for a non-US card, it will sometimes also be returned on a US card (but rarely)
• R – system unavailable – retry – this happens when there is a technical or communications error on the network.
• E – error – AVS data submitted was invalid – if the data sent to the network is garbled or incomplete
• S – Not supported – S only happens on cards issued in the US where AVS is not supported.  Typically this is the case for pre-paid and gift cards
• B – Address information not provided for AVS check
• G – Non-U.S. Card Issuing Bank
• P – AVS not applicable for this transaction