Benefits of enabling card verification for your recurring business

By
| Last Updated: May 26, 2017 |

Reading time: 3 minutes

Have you ever asked yourself this question while you were hovering your cursor over the tiny check-box ?

Card Verification ChargeBee

The most commonly used method to verify credit card is the Luhn checks. This is a simple arithmetic algorithm can only validate if the 16 digits entered could be a credit card number. It fails to determine if the credit cards are still valid, or if they have a valid credit line or if they were stolen from someone else, and this is where card verification comes into place.

Multiple ways of card verification:

  • Card Verification Value(CVV): is a security feature for “card not presentpayment card transactions against credit card fraud.
  • Address verification system (AVS): is a system used to verify the address of a person claiming to own a credit card. The system will check the billing address of the credit card provided by the user with the address on file at the credit card company.
  • Validity of the card: The validity of the card is the date that shows the date of expiry of the card. Which should be of a later than the present date.

Card Authorization(another method used for credit card verification) is done in two ways:

  • A $0 charge like the Braintree Payments
  • A $1 charge which is made void later. Used in the absence of the $0 charge. This is one of the common technique that is used. The amount is captured and released, so it does not show up in statements. (Caveat: Some customers may get notification from their banks).

Some scenarios where credit card verification should be used:
When you have a signup flow with credit card.

Why should the verification take place?
When you have verification for credit cards, it enables you to have quality leads that you could nurture, as the system does not store the cards that fail the verification.
It is not necessary to charge the customer, $0 plans could be there or you could take after AWeber.

AWeber

For subscription goods:

The merchant should ideally collect the card during signup rather than when the charge happens i.e, at the time of shipping.

Why should the verification take place?
To prevent your business from being vulnerable to fake cards or frauds.

How does ChargeBee do it?
When enable credit card is checked, depending on the payment gateway the merchant is using, does a $0 or $1 authorization, ensuring that only the authorized credit cards are stored into the card vault.
Note: The credit card verification or authorization does not validate the balance on the card. There is not guarantee that the subsequent transaction amount will go through, but you will get to know if the card is valid or not.

Card verification is a vital shield for online merchants; any business in their initial stages may overlook these factors, but as you scale fraudsters, scamsters and impostors catch up with you too. Regardless of your choice of payment gateway, the card verification feature protects your business against such malpractices.

 

Author of the post

Bhargavi P

Product Marketer at Chargebee. Coffee Addict, Music Explorer, Avid Reader, Poet.

Subscription Billing Made Easy

Try for free

Recent Blog Posts

SaaS Growth and Recurring Billing
Unhacking SaaS growth and rethinking recurring billing's role in it

Behind the question of whether a billing system can help your SaaS business grow is the question of what it means for a SaaS business to grow. This guide tackles both — it creates a model you can use to approach SaaS growth and a 360-degree view of how your billing system fits into it. Read More >

Scaling SaaS Billing
Scaling SaaS Billing: How To Plan For The Insanity

Scaling your SaaS billing system can be complex. Here's the guide to making sure your subscriptions don't suffer for it. Read More >

Purpose Driven Friction
Friction Isn't Always the Bad Guy in User Experience

How friction improves UX in SaaS, how it helped Chargebee's onboarding and activation flows, and the right way to handle positive, purpose-driven friction. Read More >

Subscription billing software that lets startups deliver recurring happiness to customers.
How Chargebee Works