A significant point to understand regarding prepaid payment instruments concerns address verification. Unlike traditional credit cards, a prepaid card, such as those branded by Visa, typically lacks a direct connection to an individual’s residential address. Instead, the card may be associated with a registered address during the activation process, or in some cases, operate without any linked physical location.
This distinction is important because certain online transactions and purchases may require Address Verification System (AVS) checks. AVS is a security measure used to prevent fraudulent transactions by matching the billing address provided by the customer with the address on file with the card issuer. The absence of a directly linked billing address on a prepaid card can present a challenge during these verification attempts. Historically, financial institutions relied heavily on AVS as a primary fraud deterrent, making this a crucial point for cardholders to be aware of.
