Razorpay Becomes First Indian Payment Platform to Introduce Address Verification System for Cross-Border Transfers

With the rising “digital influence” on consumers throughout the world, online portals as a preferred channel for trade are undergoing significant growth. There’s also an increasing trend of India’s businesses “going global,” according to Indian Fintech Razorpay.

The company shared data which reveals that merchandise exports from India reached a record high of $35.2 billion in July of this year, which is reportedly the highest-ever monthly figure.

It represents an increase of 47.91% “over the $23.78 billion in July 2020 and an increase of over 34% over the US$26.23 billion in 2019.” Razorpay also noted that this is “expected to double up by 2025, as per [India’s] commerce ministry.”

But going global comes with certain challenges, with the biggest or most significant one being “ensuring a safe and secure way” of carrying out cross-border transfers. If you’re operating an international business and are looking for a solution to address security issues, then you’ve arrived at the “right place,” the Razorypay team writes in a blog post.

The company added:

“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.”

As explained by Razorpay, AVS is a fraud prevention service offered 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,” the Fintech firm noted. It also mentioned that 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.”

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

And if 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,” the Razorpay team explained.

Although the purchaser must provide a full address when performing an online purchase, “only the numeric values provided are verified by the cardholder’s bank,” the company clarified while adding that in most cases, “only the street number and the zip code are compared to what is on the issue system.”

As noted by Razorpay, two-factor authentication is not currently required for most international transactions which means anyone is able to “transact by simply entering the card number.” The buyer won’t be “challenged with an OTP or any other additional factor of authentication,” Razorypay noted while adding that this is “completely different from the way payments are processed in India where an OTP validation is mandatory.”

As mentioned in the update from Razorpay:

“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.”

Razorpay further noted that, unlike local card payments, in the case of cross-border transfers,  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,” Razorpay explained.

As noted by Razorpay:

“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.”

They company added:

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

For more details on this update from Razorpay, check here.

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