What Is a CVV on a Credit Card and How Does it Work?

The card verification value (CVV) is one of several security features that helps reduce fraudulent credit card transactions. Its primary purpose is to verify that a person making an online or over-the-phone purchase with a credit card has physical possession of that card.

In this article, we’ll cover why CVVs are essential and how they work so you can better understand how they strengthen your defences against credit card fraud.

What Is a CVV on a Credit Card?

The CVV is a three or four-digit number found on your credit or debit card, separate from the card number itself. It acts as an additional security layer during transactions. You’ll find this code on the back of MasterCard and Visa cards and the front of American Express cards. This code is crucial in online and over-the-phone transactions where the physical card is absent.

CVV Credit Card

Image: Graphic showing the typical location of a CVV code on a credit card. (Source)

Why Do Credit Cards Have a CVV Code?

The CVV code provides an extra level of security for both businesses and customers. It’s primarily used in “card not present” transactions, such as online purchases or telephone orders.

The CVV proves that the person making the transaction has physical possession of the card because merchants are prohibited from storing CVV codes.

Asking for the CVV code adds a hurdle for potential fraudsters who have stolen card number data but don’t have the physical card.

The CVV code also helps you mitigate the risk of card chargebacks. These occur when a customer disputes a transaction and requests a refund from their credit card issuer. By requiring the CVV code, you can demonstrate that the customer had the card physically at the time of the transaction, making it harder for customers to falsely claim unauthorised or fraudulent activity.

How Does a CVV Work?

When a customer enters their CVV during checkout, it’s sent to the card issuer for verification. The issuer compares the CVV with the stored value to confirm its accuracy, allowing the transaction to proceed securely.

Let’s look at an example of how a CVV is used in a typical online transaction.

  1. A customer decides to make a purchase from your online store, selecting their desired products and proceeding to the checkout page.
  2. At checkout, they’re required to input several pieces of information, including the credit card number, expiration date, and CVV.
  3. Upon entering these details, the customer submits the payment form, triggering a series of communications initiated by your payment gateway.
  4. The payment gateway, which facilitates the secure transfer of payment information, sends the transaction details, including the CVV, to your merchant account.
  5. Your merchant account, which serves primarily as a repository for funds, forwards these transaction details to the card issuer (e.g., Visa or MasterCard).
  6. The card issuer checks the provided CVV against their records. If it matches, it deems the transaction legitimate.
  7. If the CVV doesn’t match, the transaction is declined as a potential fraud risk.

This verification process happens within seconds, providing a seamless shopping experience for the customer. Still, robust checks are performed in those few seconds, significantly reducing the likelihood of fraudulent transactions slipping through the net.

Remember that a declined transaction due to a mismatched CVV can sometimes be a simple user error. So, it’s a good idea to offer customers the opportunity to re-enter their details before cancelling the transaction outright. This can be set up with your payment gateway.

In Conclusion

The CVV on a credit or debit card is a 3- or 4-digit code that merchants aren’t allowed to store. Performing a CVV check is critical in securing “card not present” transactions as it helps ensure the person making a purchase has physical possession of the card.

Integrating this process into your payment system adds a strong protective measure that helps to protect your business and customers from potential credit card fraud.

For a deeper look into business transaction solutions, check out our roundup of the best credit card machines for small businesses.

Frequently Asked Questions

Is CVV the same as a PIN?
No, CVV is not the same as the Personal Identification Number (PIN) associated with a debit or credit card. The CVV is primarily used for online purchases, whereas the PIN is for in-person transactions. You should always keep your PIN confidential.
Do all cards have a CVV?
Not all cards have a CVV. While most credit and debit cards have CVVs, some types of cards, such as gift cards or certain prepaid cards, may not have a CVV.
Can a transaction happen without a CVV?
Yes. While the CVV adds an extra layer of security, there are cases where merchants or payment processors may not require it for certain types of transactions, such as recurring payments or card-on-file transactions.
Written by:
Richard has more than 20 years of experience in business operations, computer science and full-stack development roles. A graduate in Computer Science and former IT support manager at Samsung, Richard has taught coding courses and developed software for both private businesses and state organisations. A prolific author in B2B and B2C tech, Richard’s work has been published on sites such as TechRadar Pro, ITProPortal and Tom’s Guide.