Card Security Code

The Card Security Code (CSC), sometimes called Card Verification Value or Code (CVV or CVC), is a security feature for credit or debit card transactions, giving increased protection against credit card fraud.

There are actually two security codes:

• The first code, called CVC1 or CVV1, is encoded on the magnetic stripe of the card and used for transactions in person.
• The second code, and the most cited, is CVV2 or CVC2. This CSC (also known as a CCID or Credit Card ID) is often asked for by merchants so that they can secure "card not present" transactions occurring over the Internet, by mail, fax or over the phone. In many countries in Western Europe, due to increased attempts at card fraud, it is now mandatory to provide this code when the cardholder is not present in person.

This latter CSC should not be confused with the standard card account number appearing in embossed digits. (The standard card number undergoes a separate validation algorithm called the Luhn algorithm which serves to determine whether a given card's number is appropriate.)

Location of CVV2

The CVV2 is a 3- or 4-digit value printed on the card or signature strip, but not encoded on the magnetic stripe.

• MasterCard, Visa and Discover credit and debit cards have a 3-digit code, called the "CVC2" (card validation code), "CVV2" (card verification value), and "CID" (card identification number), respectively. It is not embossed like the card number, and is always the final group of numbers printed on the back signature panel of the card. New North American MasterCard and Visa cards feature the "CVC2" in a separate panel to the right of the signature strip.^[1] This has been done to prevent overwriting of the numbers by signing the card.

• American Express cards have a 4-digit code printed on the front side of the card above the number, referred to as the CID. It is printed flat, not embossed like the card number.

The number is generated when the card is issued, by encrypting the card number and expiration date under a key known only to the issuing bank. Supplying this code in a transaction is intended to verify that the customer has the card in their physical possession. To date, no cracks for this system are known.

Security benefits of CVV2

Since the CVV2 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, have recently begun requiring 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 corrupt merchant 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 would also have to note the CVV2 visually and record it, which is more likely to arouse the cardholder's suspicion.

Online merchants who require the CVV2 in their transactions are forbidden^[2] in the USA by Visa from storing the CVV2 once the individual transaction is authorised and completed. This way, if a database of transactions is compromised, the CVV2 is not included, and the stolen card numbers are less useful.

CVV2 limitations

• The use of the CVV2 cannot protect against phishing scams, where the cardholder is tricked into entering the CVV2 among other card details via a fraudulent website. The growth in phishing has reduced the real-world effectiveness of the CVV2 as an anti-fraud device. There is now also a scam where a phisher has already obtained the card account number (perhaps by hacking a merchant database or from a poorly designed receipt) and gives this information to the victims (lulling them into a false sense of security) before asking for the CVV2 (which is all that the phisher needs).^[3]
• Since the CVV2 may not be stored by the merchant for any length of time^[2] (after the original transaction in which the CVV2 was quoted and then authorized and completed), a merchant who needs to regularly bill a card for a regular subscription would not be able to provide the code after the initial transaction.
• Some card issuers do not yet use the CVV2 - although MasterCard started in 1997 and Visa in the USA had them issued by 2001.^[3] This means the use of CVV2 codes must remain optional; however, transactions without CVV2 are likely to be subjected to more stringent fraud screening, and fraudulent transactions without CVV2 are more likely to be resolved in favour of the cardholder.