Anyone who's found themselves shopping online during the pandemic has ended up on the checkout page, painstakingly filling out the fields for billing and shipping addresses. Typing in the info isn't hard, but it is annoying — especially when those addresses are the same — and can slow down your Peloton/PlayStation 5/Hill House nap dress purchase.
What is a billing address, anyway? What does it get used for? Does your billing address matter?
Kelley Long, a Certified Public Accountant and member of AICPA’s Consumer Financial Education Advocates group, says online retailers have customers provide a shipping address because (duh) items aren’t always going to the person who’s paying — like when you're ordering a gift for a friend.
But the reason they require a billing address is to prevent fraud. In card-not-present transactions, which occur any time you're not physically at a store buying something, merchants typically use something called the Address Verification Service. The service, abbreviated AVS, cross-references the billing info a customer enters with the data their card company has on file.
“It really is to make sure you are the cardholder, assuming if it were a stolen card they wouldn't have that information,” Long adds.
This is less for your protection than it is for the merchants’. Long says when a retailer accepts a credit card from a customer, they’re generally taking on responsibility for the transaction. If that purchase turns out to be fraudulent, they’re going to have to deal with the chargeback. Therefore, it’s in their best interest to verify that the card you're using is legit yours before agreeing to sell you something.
According to fintech company FIS, AVS checks the numbers you enter for your billing address, running the zip code and house number to see if there’s a match.
To avoid hitting any snags where you forget and put in the wrong info, Janet Alvarez, executive editor of personal finance blog Wise Bread, recommends keeping your accounts up-to-date with your current address.
Is it bad to have multiple addresses?
It's common for nomads and people who move around a lot for work to keep a family address — like their childhood home — on their financial records. Alvarez offers a cautionary tale born out of her own experience: Moving around the country in the early stages of her career, she used her “home” address in Texas as her primary residence. That was fine for store offers and such, but once she had a bill end up in collections because she never got it.
As long as you have a system like mail forwarding set up to avoid that situation, Long says it’s a matter of convenience. You may also want to set up a P.O. box.
“[Use] whatever would ensure that you get the mail,” she adds. “If you have a nomadic life, hopping from Airbnb to Airbnb or sublet to sublet, particularly in today’s pandemic lifestyle, it’s probably best to keep one address as your official mailing address for important things like your bank just to keep yourself sane.”
Another reason to keep all your addresses current is so that the IRS, old employers, 401(k) providers and other entities you don’t think about regularly can reach you in a timely fashion.
It’s also important for planning purposes. Say you have a life insurance policy and something happens to you. If your relatives are trying to communicate with the insurer, they may have trouble finding statements and such that verify your identity if there’s old data on file.
Bottom line: Billing and shipping addresses do serve a purpose, as annoying as they may be. You should update them all if possible. And if you need to use a permanent address, you should be careful.
“It can be a bad practice to have too many addresses in that, if somebody goes looking for you, they might have the wrong address,” Alvarez says.