Account Verification with a Zero Dollar Value authorization request
Posted on June 09, 2009
We've been getting a lot of questions about Visa's new Account Verification service. Hopefully this will help clear things up a little.
For years, card not present merchants (ecommerce, phone, fax, mail) have needed to verify a cardholder's information upon acceptance when there was a delay between collecting the credit card data and actually charging the card. For example, a merchant may collect the credit card information during the initial sign up process but offer a 30 day trial period before charging the card. In this situation, it's in the best interest of the merchant to verify the cardholder's information including the credit card number, expiration date, address and CVV value for accuracy and legitimacy. The only way of doing this today is by doing a $1.00 authorization (Visa refers to these as Ghost Authorizations). While the authorization does eventually expire, some banks will show the pending $1.00 authorization which leads to merchants inevitably getting support questions regarding an improper charge.
Visa's new Account Verification program is an alternative to the $1.00 authorization. With this program, a merchant will be able to do a Zero Dollar Value authorization request which can include Address Verification (AVS) and CVV verification. MasterCard has as similar verification process for card not present recurring billing merchants with a $1.00 'test transaction'. Visa is charging for this service but MasterCard is not.
Interestingly, according to Visa, the problem that merchants have was not the primary driver behind creating the Account Verification program. Visa is trying to eliminate $1.00 authorization request because it has a negative impact on cardholder spending. For those us who live in the space and deal with the shortcomings and problems caused by the $1.00 auth, we're pleased with the creation of the Account Verification product whether we (merchants and service providers) were considered or not.
Related posts:
Visa Misuse of Authorization
