With the rising digital influence on consumers globally, online as a channel for trade is witnessing massive growth. There is an increasing trend of Indian businesses going global. 

As per the recent data shared by the government of India, merchandise exports from India hit a record high of $35.2 billion in July 2021 — the highest-ever monthly figure ever in the country’s history. It is an increase of 47.91% over the US$23.78 billion in July 2020 and an increase of over 34% over the US$26.23 billion in 2019. This is expected to double up by 2025, as per our commerce ministry!

However, going global comes with its own set of challenges, the biggest one being ensuring a safe and secure way of cross border payment collection. If you are a global business, looking for a solution to help you overcome security challenges, you have landed at the right place!  

We at Razorpay recently launched the Address Verification System (AVS) for cross border businesses, becoming the first Indian payment solution to introduce this feature! The aim is to provide a best-in-class cross border payment experience to the businesses in India. 

In this blog, we will cover: 

  • What is Razorpay Address Verification System? 
  • Challenges faced by businesses while accepting cross border payments
  • How does AVS work when accepting cross border payments? 

What is an Address Verification System (AVS)? 

AVS is a fraud prevention service provided by Razorpay to businesses to authenticate ownership of a credit or debit card used by a customer. Along with the card number and CVV, we will also verify the cardholder’s billing address. 

AVS gives you a way to check if the shopper placing the order is the same person as the credit card holder, which is more likely if the billing address details match.

How is AVS helpful in accepting cross border payments? 

As a security feature, AVS can automatically reject potentially fraudulent transactions — which is great news for businesses looking to reduce their fraud and chargeback ratios.

In case, the merchant approves the transaction with a full AVS match that later turns out to be fraudulent, AVS result will strengthen the merchant’s case in a chargeback dispute.

How does AVS validate an address?

While the purchaser is required to provide a complete address when making an online purchase, only the numeric values provided are verified by the cardholder’s bank. In most cases, only the street number and the zip code are compared to what is on the issue system.  

What are the challenges AVS helps cross border businesses overcome? 

1. No second factor OTP verification leading to an increased risk
For a  majority of foreign card transactions, second-factor authentication is not required. This means anyone can transact by simply entering the card number. The buyer won’t be challenged with an OTP or any other additional factor of authentication. This is completely different from the way payments are processed in India where an OTP validation is mandatory. 

2. Longer chargeback duration leading to  potential business loss
The cardholder can file a chargeback for up to 120 days from the date of transaction and since there is no second-factor authentication involved, it is not easy for the merchant to fight the chargeback case. The merchant may be asked to refund the amount if the order is not delivered or there was fraud.  This is definitely very painful for businesses.

3. Higher risk checks by banks and networks
Unlike domestic card payments, in the case of cross border transactions, banks and networks are more likely to decline payments if the transaction seems risky. This is done as part of Anti Money Laundering or to avoid any kind of fraud. 

Also Read: Accepting International Payments Gets Easier with Razorpay

How does AVS work when accepting cross border payments? 

AVS is activated when the transaction is being authorised. The cardholder or buyer provides an address, and AVS tallies the address provided with the address available with the cardholder’s bank. We check for a complete match or a partial match. We also check if AVS can not be done due to a lack of support from the customer’s bank or some other error. 

We will then use this result to decide whether or not to proceed with the transaction. This process occurs during the standard authorisation communications and does not delay or disrupt successful transactions at all.

In the case of Razorpay Standard Checkout, the following is the user journey: 

  • The cardholder enters card details
  • In case, the card is issued in United States, United Kingdom, and Canada, the cardholder will be asked to enter the billing address as well
  • Customer Privacy: In case AVS is successful, Razorpay will tokenize this and store these details as tokens in our vault. This will make sure the cardholder is not asked again and again for these details. 

 How long does AVS authentication take?

AVS authentication generally requires only a few seconds to be completed and occurs without the purchaser being aware.

Countries and regions supporting AVS

AVS works for the cardholders of the United States of America, Canada, and the United Kingdom.  

What’s next for cross border payments at Razorpay? 

We’re excited to invest in more cross border payment features, so you can just focus on growing your international business. In the next few months, watch out for best in class International Success Rate, Automated Foreign Inward Remittance Certificate (FIRC), and more payment methods to ease the payments journey of your international customers. 

To learn more about Razorpay cross border payments click here. If you are an existing Razorpay user, please visit your dashboard for more details. 

Got questions or feedback? Leave a comment below, because we love to hear from you!

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Shubham Bisht
Author Shubham Bisht

Shubham is a Senior Product Manager at Razorpay and manages UPI Payment. Before moving to Product Management, he has worked on Particle Physics at CERN and ETH Zurich.

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