When a customer pays by credit card on a Direct Ordering site, the card goes through verification checks before the order is charged. This article explains the verification Direct Ordering performs at checkout (CVV and zip code), why a customer might see an "incorrect zip code" error, and why a customer might see pending charges for an order that did not go through.

Card Verification at Checkout

When a customer chooses to pay by credit card, Direct Ordering requires four pieces of information to help prevent credit card fraud:

• Credit card number
• Expiration date
• CVV code
• Zip code

Submitting the CVV code and zip code to the credit card processor allows it to perform CVV (Card Verification Value) and AVS (Address Verification System) checks. These checks are separate from approving the card itself, which only confirms that the card has sufficient funds. A processor may approve the card number and expiration date while still reporting that the CVV check, the AVS check, or both failed. A failed check indicates one of two scenarios:

• The customer entered the CVV or zip code incorrectly by accident.
• The customer may be using a stolen card number and does not know the CVV or zip code.

How a Rejected Card Appears to the Customer

Because there is no way to know which scenario is occurring, Direct Ordering treats the transaction as potentially fraudulent. The transaction is rejected even if the card itself was approved, and the checkout page reloads with one or more error messages asking the customer to correct the CVV or billing zip code and resubmit.

If the card was approved by the processor for the original amount, that authorization is voided. The voided authorization may appear in the customer's online credit card portal as a "pending" transaction. Pending authorizations like these typically disappear within three to five business days and never reach the customer's statement, though they may reduce the customer's available credit until they clear. If the customer enters the CVV or zip code incorrectly several times before getting it right, they may see multiple pending authorizations, all of which clear within three to five business days.

How Verification Prevents Fraud

Requiring all four pieces of information (card number, expiration, CVV, and zip code) adds a layer of security, because the card number and expiration date are the two items easiest to steal. Although pending authorizations can be a temporary inconvenience for customers, the added verification protects both the customer and the restaurant against fraud.

Incorrect Zip Code Errors

Requesting the customer's zip code at checkout is one of the steps that helps prevent fraud, and it cannot be removed from the site.

Why the Error Happens

An "incorrect zip code" error at checkout usually means the zip code entered does not match the billing address linked to the card. This can happen if the billing address has changed, or if the customer is using a company card without knowing its zip code. A customer who has used the same card on sites that save it or do not require a zip code may not be aware of the current one. In rare cases, some cards require a full billing address rather than just a zip code as an additional security measure.

How to Resolve It

The most reliable fix is to ask the customer to confirm the zip code on their credit card statement. Alternatively, the customer can contact the card-issuing bank to understand the rejection. One of these approaches usually resolves the issue and allows checkout to complete.

Pending Charges on Orders That Do Not Go Through

Credit card authorizations often appear as pending charges on a customer's online credit card statement and clear once they are voided rather than charged. An authorization is simply a way to confirm that a customer has sufficient funds for the amount of a specific order. For more on how authorizations and captures work, see How Credit Card Payments Work.

An order placed through a Direct Ordering site is only charged when it is confirmed. If a card is declined and the customer sees an error at checkout, the authorization is voided immediately, but it can take three to five business days for the pending charge to be removed from the statement.

For example, a card that is declined twice for an incorrect zip code and then succeeds on the third attempt results in three authorizations. The last one converts to a real charge once the order is confirmed by the store. The first two remain pending and are removed within three to five business days, depending on the financial institution.