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November 16, 2022
by David Goodale

What is a CVV code?

(Edited from video transcript for greater readability)

Hello, David here at Merchant-Accounts.ca. Today we're tackling a simple question, What is a CVV code? Stay tuned, I'm going to answer it in one second.

A CVV code, which stands for Card Verification Value, is a three-digit security code on the back of every credit card.

Card Verification Value

payment

A Card Verification Value (CVV), is a three-digit security code on the back of every credit card. It is a great anti-fraud tool to use in e-commerce and telephone-like virtual terminal-based transactions. This encompases any transaction where a customer is not physically present with the card in hand.

The reason it's a good tool to fight fraud is that under the Payment Card Industry (PCI) rules, data security standard, merchants are not allowed to record a CVV code. That three-digit security code is not supposed to be stored anywhere. The only place it's supposed to exist is on the back of a customer's card. If a customer submits that three-digit code, the CVV code, in their e-commerce order, you will a obtain security result from your payment processor.

Validating CVV Codes

The result will indicate that it matched or it didn't match. If it matches, you know, two things, you know that the security code was valid, and you also know that there's not supposed to be any records of that code stored anywhere. In other words, it should be harder for hackers to get their hands on the three-digit security code than it would the card number.

I will admit it is not a perfect practice because nothing stops merchants from recording or storing CVV codes, but they're not supposed to. CVV is a very good tool, it's a very good indicator to look at to determine if a transaction is suspect or if it's legitimate. If you ever have a suspicious order, my strongest advice is always to call that cardholder, and make sure it is a legitimate transaction. We have other content on our channel about how to spot and fight fraud. One of the videos recently that we did was about how to use modern video conferencing technologies such as Zoom or Google Meet to Combat fraud. If you have any questions, you can check that video out.

Summary

I hope I've answered the question. Thanks for watching. Have a great day there. If you need any help setting up a merchant account you can always cuntact us for a free quote.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant Accounts.ca. I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

Toll free: 888-414-7111 ext. 5
Direct: (905) 901-2254
david.goodale@merchant-accounts.ca