What Is Address Verification? See If They Live Where They Say

 If you run an online business, the struggle with inaccurate addresses is likely all too familiar.

Typos, incomplete information, or even outdated addresses can lead to a cascade of problems – from frustrated customers and delayed deliveries to increased operational costs and potential fraud.

For this reason, e-commerce companies should verify residential and commercial addresses against the postal address database. Address verification software helps businesses validate and standardize shipment addresses. These tools also help banks prevent credit card fraud and shipping companies prepare delivery location geocoding.

Address verification solutions help companies ensure speedy deliveries, reduce undeliverable mail costs, and make data-driven decisions. Online stores use these solutions to flag fraudulent virtual credit card transactions.

What is an address verification service?

An address verification service (AVS) matches customers' billing addresses with bank records to verify their card ownership. Card processors set up AVS to detect suspicious credit card activity and prevent scammers from using stolen debit or credit cards. 

AVS fraud prevention systems alert merchants in case of address mismatches. The merchants then decide whether to process the transaction. Customers receiving an AVS decline must contact the bank to clear pending charges. 

AVS initially aimed to help mail-to-order/telephone-to-order (MOTO) transactions but soon became an essential element of card-not-present (CNP) fraud detection systems. Not all credit card providers offer AVS worldwide. 

Visa, MasterCard, Discover, and American Express support AVS in the United States, Canada, Australia, New Zealand, and the United Kingdom.

Shoppers in these countries use AVS to keep card information-stealing attacks at bay. Merchants use AVS response signals to prevent chargeback requests.

How does an address verification system work?

Address verification systems follow these steps to protect customers and businesses:

1. AVS check request: Once a shopper provides payment and billing address information, a merchant places an AVS check request.
2. Address comparison: A card processor checks the billing address against the database.
3. AVS level declaration: An AVS system shows one of the following statuses, depending on address match accuracy levels:
   
   

   Status	Meaning
   Full match	Correct street address and ZIP code
   No match	Incorrect address
   Partial match (ZIP code)	Correct ZIP code
   Partial match (address)	Correct street address
   Unavailable	Unresponsive AVS processor
   International	Foreign address formats
   Unavailable	No information
   Retry	Server error

4. Merchant decision: A merchant can accept, reject, or investigate transactions based on AVS results.

Address validation vs. verification

Address validation checks a postal address against a database to determine whether it’s a deliverable address. Address validation tools typically use authoritative databases such as the United States Postal Service (USPS) or Canada Post to run these comparisons.

Address verification parses, matches, formats, transliterates, and enhances address lists to ensure accuracy. Some software solutions use delivery point validation (DPV) or  Coding Accuracy Support System (CASS) certified address lookup engines or global reference databases to check how accurate and complete an address is.

The main difference is that address validation solutions validate addresses and check deliverability, whereas address verification enhances address data for accuracy.

Importance of address verification

Customer-facing businesses collate multiple geographic and demographic databases. Customer data isn’t always accurate because of human errors like typos and missing numbers. If that isn’t enough, more than 130 address formats exist around the world. 

Nowadays, businesses use address verification systems to resolve customer address data and correct inaccuracies. Business owners validate physical addresses across mailing lists, spreadsheets, customer databases, customer relationship management (CRM) solutions, and enterprise resource planning (ERP) systems.

Address verification solutions make retailers' lives easier in many ways. Here are a few improvements that AVS provides.

On-time delivery

Punctual delivery boosts sales and improves customer satisfaction, while failed delivery causes high customer attrition and affects annual revenue. That’s why e-commerce companies go to great lengths to get the correct addresses.

Companies use unobtrusive application programming interface (API) integrations to automate data entry, reduce keystrokes, and streamline the checkout process.

Lower shipping costs

Not having the correct address increases shipping expenses. Failed deliveries also obviously increase shipping costs, but there’s more to it than that. 

Residential address deliveries cost more than commercial ones. Large retailers use accurate customer address databases to identify geographic buying habits and plan warehouse management accordingly to deal with this problem.

Fewer fees for address correction

Third-party logistics providers like FedEx or United Parcel Service (UPS) charge address correction fees when original ship-to addresses don’t match their database data or format. 

When businesses don't validate delivery addresses at checkout, they’re more likely to overlook errors and end up paying these fees. Address verification software systems help companies identify and address mistakes and minimize correction charges. 

Fraud prevention 

Address verification also limits credit card fraud and chargebacks. Merchants use address verification tools to verify cardholder addresses, authenticate CNP transactions, and minimize chargebacks. 

Sharing economy businesses and ride-sharing software providers leverage address verification software to meet know-your-customer (KYC) requirements and establish trust. 

Promotional material localization

Retail chains customize products and mail promotional materials frequently. They typically use internet protocol (IP) addresses to filter customer locations. However, IP addresses only offer ZIP codes and aren’t always reliable. 

Moreover, some users hide their IP addresses with virtual private network (VPN) software to prevent traceability. In these cases, address verification solutions narrow down valid addresses to help direct marketing efforts. 

Better checkout cart conversion rate

Average checkout pages require customers to fill seemingly endless form fields manually. Customers often don’t like this lengthy checkout journey and abandon carts. 

One way to address this problem is to leverage intelligent address auto-completion. Smart address validators capture data from minimum inputs and suggest addresses. Customers pick the correct suggestions and proceed to payment.

Types of address verification methods

User experience (UX) can make or break e-commerce businesses. Customers want a frictionless checkout experience, and stores want to streamline the order fulfillment process by validating users' addresses. 

The right address verification tool with design and microcopy kills two birds with one stone. Below are the four types of address capture verification tools that businesses use.

How does address verification software work?

Imagine a software combining your customer data and delivering accurate, fit-for-purpose data – that’s what an address verification software does. 

It verifies the numeric part of an address against a standard postal service address database. Some solutions also offer real-time validation using address verification API. 

First, a customer keys in debit or credit card data during a transaction. The credit card processor or issuer compares the billing address with the address on bank records. 

The address verification system sends a one-digit code to the retailer depending on the similarity between these two addresses. Merchants interpret this code to decide whether to accept or reject the transaction.

Address verification methods

Address verification programs use different address-matching algorithms to return verification codes. Below are some of the most common methods that verifiers use.

Fuzzy matching

Customer databases typically return too few or too many results for a query. Businesses can’t sit throughout the day to correct or deduplicate them manually. They use fuzzy address searching to find potential matches for an address.

Fuzzy matching, or approximate string matching, is an intelligent application. It returns all potential records instead of flagging a record as a match or non-match. This algorithm looks at a word’s uniqueness to correct other elements. Natural language processing (NLP) also plays a crucial role in identifying and correcting typos in real time.

Data quality software uses fuzzy matching to correct phonetic address misspellings and reformat numeric elements. Spell checkers inside document creation software use fuzzy matching to recognize word patterns, find a word match in the database, and generate alternatives.

Geocoding and reverse geocoding 

Businesses use address data visualization to optimize distribution channels and streamline logistics. For example, retailers can fetch customers’ actual locations and serve them better using location intelligence software. Geocoding offers location insights and helps companies tailor services accordingly.

Geocoding or address geocoding converts an address description into a pair of geographic coordinates. This address verification method helps businesses locate an address on the Earth’s surface. Using geographic information system (GIS) software, geocoding displays locations spatially and enables you to analyze data and recognize patterns. 

Reverse geocoding translates latitude and longitude coordinates into human-readable addresses. This method interprets coordinates into data to help businesses make data-driven decisions.

Types of geocoding and reverse geocoding

Geocoding and reverse geocoding processes offer different accuracy levels depending on their algorithms.

Address standardization

Address standardization or address normalization checks, corrects, formats, and deduplicates address records to meet national postal standards.

Businesses use address standardization to resolve the following information issues:

• Incomplete: Missing block or street numbers and ZIP codes
• Invalid: Non-existent address and ZIP codes
• Incorrect: Misspellings, typos, and wrong abbreviations
• Inaccurate: Wrong address data

Businesses also experience address changes due to rapid urban development and new construction. Address standardization helps them add accurate delivery network addresses and share store pickup information.

Address verification use cases

Many businesses across domains regularly need to check whether an address is deliverable or not. Take a look at these common address verification applications to understand whether an address verification tool is helpful for your business.

• Postal address verification helps delivery companies check mailing addresses in bulk and validate user data.
• Localized material delivery needs optimal census block identification and customer geographies for effective decision-making.
• Local services use address verification API to prevent bookings outside their service area. In these cases, the API standardizes, parses, and validates customer addresses before accepting or rejecting bookings.
• Database cleaning is crucial for every business domain. A database with invalid addresses is of no use.
• Demographic metrics enable businesses to identify lookalike demographics, analyze customer preferences, and expand offerings. Address verification helps these businesses to extract and validate demographic and geographic information.
• Checkout cart conversion relies on intelligent auto-completion for faster checkouts. Customers save time because they don’t have to enter any information manually.
• Route planning helps courier companies identify faster shipping routes for on-time delivery. It also helps them calculate shipping costs using address verification tools.
• Map development depends on enhanced visualizations, which address verification can help with.

Address verification best practices

Regardless of their size, businesses collect address information from marketplaces, checkout systems, customer profiles, and third parties. The right address verification software helps companies standardize data and format it correctly with DPV. 

Follow these five best practices to make the most out of residential and commercial address verification software.

1. Offer guest checkout to reduce shopping cart abandonment risks. When customers don’t have to fill out custom fields, they’re more likely to complete their purchase.
2. Use the minimum number of fields to shorten the checkout process. Shorter checkouts translate into higher conversion rates. You can also add different address lines (civic number, street name, and apartment number) instead of separate address fields for the house number and so on to minimize friction.
3. Trigger immediate address validation without waiting for customers to fill out the complete mailing address or checkout form. Without immediate triggers, customers will have to wait longer, which might lead to a negative customer experience.
4. Validate against postal data to comply with shipping carrier data formatting. This verification returns metadata about the verification status and guarantees parcel deliverability.
5. Describe error messages with specificity so customers can accurately make changes and transact with your business. Generic notifications like ”invalid entry” won’t help users understand what’s wrong with their address data. You can also provide help texts to let them know which errors to check. 

How to choose the best address verification software

Address verification streamlines business operations. Companies lose money because of inaccurate and outdated data, while the right address verification software ensures a smooth connection with customers.

Below are the features that businesses should look for in an address verification solution.

Data quality

High-quality data is one of the most important factors to consider when choosing an address verification vendor. Top software solutions use proprietary frameworks to cleanse and validate data against multiple third-party systems, country-specific restrictions, and structures. 

These providers also geo-locate and repair data as per client needs. With high-quality data, businesses increase operational efficiency, effectively communicate with customers, and drive return on investment (ROI). 

Integration capabilities

Address verification integration capabilities improve data quality across systems. That’s why it’s best to look for software solutions that work with your existing CRM or ERP systems. 

Advanced integrations help you capture accurate data at the entry point, eliminate redundancies, and maintain data accuracy throughout databases.

Data security

Companies also need to look into a vendor’s data security measurements before opting for an address verification tool. 

A software provider's privacy and security policy tells you how they store, treat, and use your data. You can also sign a non-disclosure agreement (NDA) so a vendor maintains their privacy commitments and protects your data. 

Best address verification software in 2024

The right address verification software helps you cut costs, maintain compliance, and effortlessly connect with customers. These top software solutions are ideal for fixing poor-quality addresses, securing data set accuracy, and boosting operational efficiency.

To be included in this category, the software product must:

• Standardize address information to a universal format
• Automate address checks against an authoritative database
• Integrate with address databases or leading industry software
• Use fuzzy matching or other corrective processes to modify askew data

1. Smarty

Smarty offers non-postal, international, and USPS address validation API solutions. These APIs enrich global address data and help you streamline operations with location data intelligence. Their address autocomplete API comes with data entry and geocoding capabilities.

What users like best:

“Their API is straightforward to implement. I'm using Java, and they have lots of examples of using Java SDK. The data they returned was extensive, clearly organized, and easy to parse. You can use their web interface to submit a troublesome address, which can help you resolve issues ranging from customer service to development.

I also like their billing options. When our volume fluctuates, we can easily upgrade or downgrade our subscription online.

We recently added their address completion widget, and it was easy to customize to fit our look and feel. The parameters for the address completion were easy to fine-tune, such as how soon you offer suggestions to your users.”

– Smarty Review, Curtis Y.

What users dislike:

“I think the methodology behind the auto-complete functionality could improve. I understand the reason behind the idea but would prefer it more straightforward for the end-user who gets the suggestions. Different scenarios suggest non-existing addresses, which can be confusing during funnel activity.”

– Smarty Review, Erik K.

2. Sumsub 

Sumsub is a comprehensive platform that empowers businesses to seamlessly verify users through ID checks, document verification, and liveness detection. It is also equipped with tools to monitor transactions, ensure compliance, and prevent fraud with customizable risk assessments. 

What users like best:

“What I appreciate the most about SumSub is their outstanding support and user-friendly interface. As someone who verifies new clients regularly, I find their intuitive app very helpful, and I feel at ease knowing exactly who my clients are. The team behind SumSub is also highly responsive, always ready to answer my questions and offer assistance whenever I need it. Overall, SumSub is a great solution for businesses that prioritize user verification and security.”

– Sumsub Review, Peter M.

What users dislike:

“A lot of false positive rates. Which is approximately 10% for false approved address documents. But, to be fair, it might be partly on our side due to misconfiguration of the levels."

– Sumsub Review, Ilya v.

3. Melissa Data Quality Suite

Melissa Data Quality Suite cleans, corrects, and verifies addresses at the entry point. This product also features name, phone number, and email verification capabilities. Customers can use the suite as a web service, cloud APIs, or multi-platform on-premise APIs.

What users like best:

“The support team at Melissa Data is very knowledgeable and talented. Whenever there's an implementation or customization problem, their team quickly responds and resolves our issue.

If we ever have any questions about using the software, we can talk to an agent who offers custom solutions.

The Melissa Data match-up is usable offline, a big selling point for our organization. That feature has been a requirement for a few projects, and this is the only option we found to deliver that requirement.”

– Melissa Data Quality Suite Review, Shane H.

What users dislike:

“The thing that I have found the most inconvenient is that the software needs an update installation almost every month. I wish that the frequency was a little less and that multiple updates could be consolidated into fewer so that we do not have to undergo updates and installs so often.”

– Melissa Data Quality Suite Review, Isha S.

4. Informatica Cloud Data Quality

Informatica Cloud Data Quality helps businesses monitor and fix problems with extensive prebuilt data quality rules. This software features data discovery, data quality transformation, artificial intelligence-driven insights, and serverless Spark processing. 

What users like best:

“The correction of equations and methods has worked out pretty well with Informatica Cloud Data Quality regarding manual data entry, as it has allowed us to interpret the results properly. It is beneficial when you want to blend with current ETL mapping regulations and also provide added value through some quality control statements. 

Also, it allows you to look at the data in real time, as the data quality algorithm tests and performs the specific rules after building the job by developing a navigation window to update and access the data instantly. For reliable and immaculate results, they assisted us by identifying inaccurate accounting information.”

– Informatica Cloud Data Quality Review, Collin H.

What users dislike:

“It does take some time and training to get used to all data quality and governance tools. There's a learning curve for resources as well.”

– Informatica Cloud Data Quality Review, Sandeep K.

5. Loqate

Loqate captures, verifies, and enriches address data with unmatched accuracy, empowering businesses to deliver a flawless user experience. It boasts the most curated location data in the world, spanning over 250 countries and territories and supporting 6,500 languages. This ensures exceptional precision, regardless of your customer's location.

What users like best:

"I've been using Loqate for a very long time, in fact from when they were still called Postcode Anywhere. I like the simplicity of the system, the reliability of the results, and the PAYG (pay as you go) credit system, which makes it easy to control our budget."

– Loqate Review, Gregory D.

What users dislike:

“The price seems exaggerated to me; other free plugins can do similar and even simpler things."

– Loqate Review, Juan O.

Clean up your dirty data!

Data fuels operations, strategies, and business decisions. But you can’t find insights when all that data is dirty. That’s why businesses use data quality software to create high-quality datasets and discover reliable insights. 

Learn how data cleaning can help you remove data silos and improve operational performance.