Validation Code

An extra layer of security that protects customers from fraud when making payments online or over the phone

What is a Validation Code?

A validation code is an extra layer of security that protects customers from fraud when making payments online or over the phone. The code comprises three or four numbers located at the front or back of a credit card.


Validation Code


A validation code is different from a PIN, which a user is required to input when making cash withdrawals at an ATM using a credit or debit card. It is primarily used as a fraud prevention measure that online merchants can use to verify purchases.

Usually, online merchants require customers to provide a validation code for the credit card they are using to make online purchases. It verifies that the individual using the card is the actual cardholder and has physical possession of the card.

It may also be known as a card verification value (CVV), card code verification (CCV), or card verification code (CVC).



  • A validation code is a cluster of three or four numbers that are located on the front or backside of a credit card.
  • It is a security feature that customers are required to provide when making online purchases to help prevent fraud.
  • It is different from a personal identification number (PIN), which users are required to provide for point-of-sale transactions.


Validation Codes Explained

A validation code is a security feature in addition to the bank card number that is printed on the card. It is used in “card not present” card transactions, where the personal identification number (PIN) cannot be used.

The PIN is inserted manually during a point-of-sale transaction or at the ATM when withdrawing cash. When the customer is physically present at the point of sale, they are only required to input the PIN.

Merchants who require the code when processing card transactions are prohibited from storing the codes once the transaction is authorized. If the merchant’s database is compromised, the stolen information will not include the validation code.

Also, employees who can access payment gateways and the customer’s credit card information cannot use the information for malicious purposes since the validation code is not saved in the merchant’s database of transactions.


Where to Find the Validation Code

The validation code is typically a three or four-digit number that is printed on the signature strip on the back of a credit card. When using a VISA, MasterCard, or Discover credit or debit card, it is the final cluster of numbers that is printed on the back signature panel on the back of the card.

A card’s signature panel contains a series of digits. The last three digits are the validation codes. On American Express cards, the code is located on the front of the card towards the right side, above the account card number.


Types of Validation Codes

The following are the main types of validation codes:


1. CVC1/CVV1

The CVC1/CVV1 code is printed on track two of the magnetic strip. It is used by merchants in “card-present transactions” when the customer is physically present at the point of sale.

This code is automatically retrieved when the card is swiped on a point-of-sale system and authorized by the issuer. It verifies that the owner of the card is physically present at the point of sale.


2. CVV2/CVC2

The CVV2/CVC2 is used in “card-not-present” transactions, where the customer is not physically present at the point of sale. It is used to verify payment transactions that occur online, by email, telephone, or on e-commerce websites.

The customer is required to input the validation code before a payment transaction is authorized. If it is not provided during the transaction, the payment is automatically rejected.


How Validation Codes Prevent Fraud

When a customer goes online and buys a product or service, they are required to provide their personal information, physical address, and credit card details such as card number, expiration date, and validation code. If any of this information is incorrect, the payment is automatically rejected.

Most merchant sites may save the information on the database – except the validation code – to make it easier for customers to make transactions in the future.

Usually, a customer may not know the validation code of a card unless it is in their possession. The validation code is an important piece of data that can prevent cyber thieves from using another person’s card to make fraudulent online transactions. If a customer loses their credit or debit card, they are required to immediately alert the card issuer who then blocks the card to prevent misuse.


More Resources

CFI is the official provider of the Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

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