A guide to payment verification

Payment verification is a security measure used in online transactions. Verification serves as a check to confirm that payment information provided is accurate and that the person making the payment is authorized to do so.

For example, when a credit card is used for an online purchase, the payment system checks if the card number, expiry date, and CVV code match the issuing bank’s records.

This online payment verification process is about bolstering security and protection. Verifying that payments are legitimate can reduce the likelihood of fraudulent charges and disputes and opens a path to secure online transactions.

Read on to learn how payment verification works, the security methods associated with it, and steps to help avoid fraudulent activity.

What is payment verification?

Payment verification helps with fraud prevention by verifying the authenticity of the payment and the person making the payment. Retailers and payment systems do this to reduce the risk of unauthorized transactions and identity theft.

Payment verification helps merchants, too, by checking if the payment details provided match those on record with the payment network or issuing bank.

So, there is both seller protection and buyer protection in the payment verification process.

Different types of payment verification methods

Here are five examples of online payment verification methods:

Password verification

Password verification is a basic security measure used in online transactions. This method assumes the password is known only to the account holder; however, passwords can be vulnerable to theft or even "cracking" if a password is weak.

One-time passwords (OTPs)

OTPs are temporary, valid codes sent to a person’s smartphone or email to verify their identity while they are in the midst of a transaction. OTPs may add an extra layer of security by ensuring that the payment is authorized by the rightful account owner.

Multi-factor authentication (MFA)

This method requires a person to provide two or more verification factors to gain access to an account or service. Factors required could include a physical token, a password, or biometric verification like facial recognition or fingerprint scan.

Address verification system (AVS)

AVS checks the address a customer provides against the credit card issuer’s address on file. As the name suggests, this method helps verify a cardholder’s legitimate address, helping to prevent potentially fraudulent transactions.

Card verification value (CVV)

This is a three- or four-digit security code on a card that merchants request to confirm a customer has their own physical card in hand. This typically helps reduce a kind of fraud known as card-not-present transactions. The CVV can be found on the back of most credit and debit cards.

Strategies for a smooth payment verification process

Some practical steps may help enhance online security and payment verifications and protect against online fraud. Here are some effective strategies:

• Use strong and unique passwords: Use long passwords (at least 12 characters) that are a random mix of letters, numbers, and special characters. Ensure that each account has a unique password to reduce the risk of multiple accounts being compromised, if a password is revealed through data breach, phishing, or other cyberattack.
• Update contact information: Keep contact details, such as phone numbers and email addresses, associated with payment methods up to date. This helps users receive timely notifications of unusual activity and will be a way to receive one-time passwords for account verification when needed.
• Be wary of suspicious emails: Never click on links or download attachments from unfamiliar or suspicious email addresses. These could be phishing scams designed to steal personal information or login credentials.
• Review past transactions: Regularly check bank statements and transaction history for any unauthorized activity. Promptly report any discrepancies to banks or card issuers. Look for sellers and payment providers that offer purchase protection.
• Turn on multi-factor authentication: This may make it harder for attackers to gain unauthorized access—even if they have a stolen password. Consider using a passkey if available to further protect accounts from unauthorized access.
• Use secure networks: Do not conduct financial transactions over public or unsecured Wi-Fi networks. Use a secure, private connection or a VPN to enhance security.

Learn more in the Security Center.