Card Security Code - Security Benefits

Security Benefits

Merchants who require the CVV2 for "card not present" transactions are forbidden by Visa from storing the CVV2 once the individual transaction is authorized and completed. This way, if a database of transactions is compromised, the CVV2 is not included, and the stolen card numbers are less useful. Virtual terminals and payment gateways do not store the CVV2 code, therefore employees and customer service representatives with access to these web-based payment interfaces who otherwise have access to complete card numbers, expiration dates, and other information still lack the CVV2 code.

The Payment Card Industry Data Security Standard (PCI DSS) also prohibits the storage of CSC (and other sensitive authorisation data) post transaction authorisation. This applies globally to anyone who stores, processes or transmits card holder data. Since the CSC is not contained on the magnetic stripe of the card, it is not typically included in the transaction when the card is used face to face at a merchant. However, some merchants in North America, such as Sears and Staples, require the code. For American Express cards, this has been an invariable practice (for "card not present" transactions) in European Union (EU) states like Ireland and the United Kingdom since the start of 2005. This provides a level of protection to the bank/cardholder, in that a fraudulent merchant or employee cannot simply capture the magnetic stripe details of a card and use them later for "card not present" purchases over the phone, mail order or Internet. To do this, a merchant or its employee would also have to note the CVV2 visually and record it, which is more likely to arouse the cardholder's suspicion.

Supplying the CSC code in a transaction is intended to verify that the customer has the card in their possession. Knowledge of the code proves that the customer has seen the card, or has seen a record made by somebody who saw the card.