The Business Owner’s Guide To CVV2: What A CVV2 Code Is & Why It’s Important
CVV2 codes play an important role in payment security. Learn what CVV2 numbers are, how they protect your business, and other security measures you can take.
Whenever we make online purchases, we have to enter the CVV2 code on the back of our credit/debit card. If you’re a merchant who takes card-not-present transactions either online or on the phone, then your customers must do the same. But why is entering the CVV2 number important, and is it possible to bypass this step?
Read on to learn more about CVV/CVV2 codes, how they affect the checkout process, and just how these mysterious codes protect your business and your customers from fraud. Also, if security is a particular concern for you, consider looking for high-risk merchant account providers.
Table of Contents
- What Is A CVV2 Code?
- Why Do Online Shoppers Need A CVV2 Code?
- How To Bypass A CVV Code
- How Business Owners Can Safely & Legally Take Card-Not-Present Transactions
- The Bottom Line On CVV2 Requirements For Card-Not-Present Transactions
- FAQs: CVV2 Codes
What Is A CVV2 Code?
The terms CVV and CVV2 are mostly interchangeable. We’ll talk more about the differences between the two below.
A CVV2 is found on the back of credit and debit cards. It is a three or four-digit number designed to ensure that anyone making a purchase has the card physically in hand. The goal of these codes is to prevent the unauthorized use of a credit card in a card-not-present transaction.
Card-not-present transactions are typically online purchases, but they also include manually entered transactions (such as orders placed over the phone) as well.
CVV VS CVV2: What’s The Difference?
Payment brands don’t agree on the same terms for a CVV, so you will encounter more than one name for these numbers. All of the following terms refer to the same thing:
- Card Verification Value (CVV Or CVV2): Visa and Mastercard
- Card Verification Code (CVC): This term refers to the CVV/CID code
- Card Identification Number (CID): Discover and American Express
CVV codes are built into magnetic strips/chips and are automatically transmitted when you swipe/insert/tap your card. A CVV2 is simply the number printed on the back of the card and is not built into the card itself.
Where To Find A CVV2 Number On A Credit Card
Visa, Mastercard, and Discover all put this numerical code on the back of their cards near the signature space. American Express, however, placed its CID on the front of the card. Regardless of where you find it, the code does the same thing — it helps a merchant confirm that the card owner is in charge of the purchase.
Here’s a quick summary table:
|Issuer||Name||Location||Number Of Digits|
|Visa||CVV2||Back of card||3|
|Mastercard||CVV2||Back of card||3|
|American Express||CID||Front of card||4|
|Discover||CID||Back of card||3|
Note that these codes aren’t transmitted when a credit card is swiped, dipped, or tapped during a card-present transaction. The CVV2 number is another layer of security that helps merchants prevent different types of fraud and reduce their liability.
Why Do Online Shoppers Need A CVV2 Code?
It is legally required for you, as a merchant, to take a CVV2 from customers for card-not-present transactions.
Card-not-present transactions are exactly what they sound like: a transaction where a customer is making a purchase, and you are not able to see the physical card. This includes taking orders over the phone, eCommerce purchases, invoices, etc.
Online shoppers need a CVV2 code to prove that the actual cardholder is making the purchase when doing card-not-present transactions. It is the best way to prevent online credit card fraud that we have at this time.
Additional benefits of CVV2 codes include reducing the costs of credit card fraud and preventing chargebacks for merchants.
How To Bypass A CVV Code
Technically speaking, you can’t.
That said, there are ways customers can use their card where they don’t need to enter their CVV2 every time they purchase from you. Allowing (legal and secure) options for customers to avoid having to get up to find their card and CVV2 number will reduce shopping cart abandonment.
Some different ways your customers can pay that don’t require their CVV2 are digital wallets (PayPal, Google Play, subscription memberships/recurring billing, and Click to Pay.
How Business Owners Can Safely & Legally Take Card-Not-Present Transactions
Read on for the steps you need to follow to keep yourself and your customers safe when completing card-not-present transactions.
Additional Security Measures For Small Businesses To Avoid Credit Card Fraud
There are other ways for business owners to detect credit card fraud and reduce incidents, including Address Verification Systems (AVS), 3D security, and credit card tokenization and encryption.
The Bottom Line On CVV2 Requirements For Card-Not-Present Transactions
Now that you know the basics of CVV2 and how the different variations of these security codes impact you and your customers, you’re ready to take card-not-present transactions.
Make sure that your payment processing company is up to date with the latest PCI compliance standards, as you can face fines and other punishments for non-compliance.
Need some ideas? We have plenty of resources to help you find the best online payment processors for your small business.