Question:  What is the credit card verification code?  Why is this of such importance?
 
Answer:  A so-called 'card-verification value' (Visa terminology: CVV2) or 'card-verification code' (MasterCard terminology: CVC2) has been added to the rear of the card to help improve security for the consumer when buying something via mail, telephone and internet order, when the credit card is not physically presented to the merchant. The value can be found in the signature field, following the printed replica of the credit card number embossed on the front of the plastic. The value is only printed and is not contained in the magnetic-stripe data (in the case of American Express cards, the CVV2 is a 4-digit value is to be found half way down the right-hand side of the front of the card).

The CVV2 can be found as follows:

Visa® and MasterCard®


American Express®


In 2001, the credit-card organizations instructed merchants to request the card-verification value and forward it to their acquirer (in this case All High Heel Shoes, or ePed, Inc.).

Consequences:
As a result of the above-mentioned demands, each merchant accepting credit-card based mail, telephone and internet orders must now request cardholders to disclose the card-verification value and forward it to the settlement center. In short, merchants must ask for the card-verification values, and their payment systems (terminal, software, provider) must be capable of processing (i.e. forwarding) the additional information.

In practise, this means that whenever merchants request customers to provide their card details - regardless of whether in catalogues, advertisements, web-sites, or wherever the merchant's goods and services are offered - they must obtain the card-verification value and forward it in the transaction data.