Using Credit Cards for Age Verification: What You Need to Know

Online transactions have intertwined seamlessly into our daily lives, from buying last-minute groceries to subscribing to streaming services to watch our favorite comfort show.

The rapid growth of digital payments has highlighted the crucial need to control access to age-restricted goods and services. Age verification has evolved beyond simple legal compliance; it is now an essential measure to protect vulnerable groups from exposure to harmful content and transactions.

One method that has gained traction is using credit cards for age verification. But how reliable is this approach?

Below, we take a deep dive into what credit card age verification entails, its pros and cons, alternatives, and industries that rely on it.

What Is Credit Card Age Verification?

At its core, credit card age verification involves inferring a customer’s age based on their ability to possess and use a credit card. Since most countries require individuals to be 18 or older to have a credit card, this method assumes that anyone making a transaction with one meets the age requirement.

While the approach of using credit cards to verify an age has been widely adopted, especially in industries like online gambling and ecommerce, it is far from flawless. Many businesses are re-evaluating whether it’s the best option for accurate, secure age verification.

Advantages of Using Credit Cards for Age Verification

Credit card age verification does offer several benefits that make it an attractive option for businesses.

Below are some key advantages:

1. Established Verification Process

Credit cards are already a widely used form of payment in many industries, making them a familiar and accessible tool for age verification. Businesses don’t need to set up additional systems, as credit card usage can seamlessly integrate into online checkout processes.

2. Convenience for Users

For most users, using their credit card is straightforward and doesn’t require them to take extra steps like uploading documents or completing additional forms. This simplicity enhances the user experience, reducing friction at checkout.

3. Increased Security

Credit cards typically include several layers of security, such as CVV codes and encryption, which can help businesses validate a user’s age via a credit card. This adds an extra layer of protection against unauthorized access.

4. Real-Time Verification

One of the strongest selling points for using credit cards is the instantaneous verification process. Transactions are processed almost immediately, ensuring that there are no delays for the user when accessing age-restricted products or services.

5. Fraud Prevention

Since credit cards are often linked to secure bank accounts, they inherently carry an added level of security. This prevents minors from easily fabricating age verification on their own without access to a valid credit card.

While these advantages make credit card age verification appealing, there are several drawbacks to consider.

Disadvantages of Using Credit Cards for Age Verification

Credit card age verification is far from foolproof. It has significant limitations that businesses need to address to avoid compliance issues and user dissatisfaction.

1. Exclusion of Younger Users

Not all adults have access to credit cards for various reasons, such as poor credit history, personal choice, or financial ineligibility. This reliance on credit cards may unintentionally exclude legitimate users from accessing services they are legally entitled to use.

2. Privacy Concerns

Requiring users to input their credit card information for something as simple as age verification can raise privacy concerns. Many users hesitate to share sensitive financial details, especially due to the increasing risk of data breaches.

3. Potential for Fraud

Despite security measures, credit cards are still susceptible to fraud. Minors can use stolen or borrowed credit card information to bypass restrictions, making this method an unreliable solution for accurate age verification.

4. Not Foolproof

Simply owning a credit card does not guarantee that the user is of legal age. For instance, minors may use a parent’s or guardian’s card with permission, which invalidates the intended purpose of the verification.

5. Dependence on Third-Party Payment Processors

Businesses relying on payment gateways or third-party services for credit card transactions depend on those systems to accurately handle and verify user data. Any issues with these systems, such as downtime or breaches, can impact the age verification process.

Given these limitations, businesses may want to explore alternative methods for verifying user age.

Alternatives to Credit Cards for Age Verification

If you’re seeking a more reliable solution, there are several alternative methods for verifying user age. These approaches address many of the shortcomings associated with credit card age verification.

1. Government-Issued ID Verification

This method involves verifying a user’s age through official government-issued identification documents, such as passports, driver’s licenses, or national ID cards. By directly utilizing these trusted documents, this approach provides a high level of accuracy and eliminates the need to rely on inferred or estimated data.

It is a secure and widely accepted method, ensuring compliance with legal age verification requirements across various industries, such as ecommerce, online gaming, and financial services.

2. Biometric Authentication

Biometric methods, such as facial recognition or fingerprint scanning, use advanced AI technology to estimate a user’s age by analyzing their unique biometric data. This solution is frictionless and user-friendly, minimizing the need for cumbersome document uploads.

In addition to offering fast and seamless verification, biometric authentication provides enhanced security by reducing the risk of identity fraud. It is particularly useful in digital environments where a smooth user experience is critical, such as mobile applications and online platforms.

3. Document Verification

With document verification, users upload scanned copies or photos of official government IDs for age and identity verification. The platform processes these documents using sophisticated software to assess their authenticity, ensuring that only genuine documents are accepted.

This method provides a robust and reliable way to remain compliant with regulations while also protecting the sensitive information contained within the documents. It is often used by regulated industries where accuracy and security are paramount, such as banking, insurance, and online retail.

4. Mobile Number Verification

Mobile number verification leverages data provided by mobile carriers to verify a user’s identity and age.

By linking the mobile number to the user’s account or service, this method enables real-time verification that is both quick and convenient. It reduces the need for extensive data exchange while maintaining a high level of security. This approach is ideal for situations where speed is critical, such as during account sign-ups or for mobile-based services.

5. Knowledge-Based Authentication (KBA)

The process of KBA involves asking users specific, personalized questions related to their personal history, such as former addresses, prior transactions, or other secure knowledge-based details. This method helps confirm identity and age by requiring information that only the user would know.

This method is typically used alongside other verification methods to enhance overall security in industries such as finance, healthcare, and ecommerce.

How Credit Card Age Checks Work

The fundamental principle behind credit card age verification is that a user must be an adult to be a cardholder. By confirming the card’s legitimacy, a platform can confidently assume the user meets the age requirement for credit card ownership. The process is a series of swift, technical checks that are invisible to the user but highly effective.

1. Temporary Authorization / Micro-Charge Flow

This method involves a nominal temporary charge, like one dollar or even a single cent. The transaction tests the card’s validity and, if successful, confirms the user’s legal status as a cardholder without requiring them to share any sensitive personal data. A temporary hold on funds is released immediately, ensuring no actual transaction takes place.

2. AVS (Address Verification Service)

AVS is a standard security measure that validates the cardholder’s billing address against the information on file with their bank. It’s an integral component of credit card identity verification, adding a crucial layer of trust by confirming the user is the legitimate cardholder. A successful AVS match provides confidence in the user’s legitimacy, an important element in the overall age verification process.

3. CVV & Expiration Date Checks

The card verification value (CVV) and the card’s expiration date are simple but powerful. The CVV, a security code not stored by merchants, proves the user has physical or digital access to the card. Validating the expiration date ensures the card is active. These two checks are essential for any secure online transaction.

4. BIN/IIN Checks (Card Type & Issuer Intelligence)

The first six digits of a credit card number, known as the bank identification number (BIN) or issuer identification number (IIN), offer immediate intelligence about the card. This data reveals the card’s issuing bank, brand (e.g., Visa, Mastercard), and country. This information can be used to flag transactions from high-risk countries or with cards not typically associated with adult populations.

5. 3D Secure (EMV 3DS) and Issuer-Based Authentication

For maximum security, 3D Secure (EMV 3DS) provides an additional authentication layer. This protocol directs the user to their bank’s portal to confirm their identity with a one-time password, biometric scan, or other secure method. This “issuer-based authentication” is a cornerstone of a secure age verification credit card solution, providing a near-certainty of the user’s identity.

Credit Card Fraud Types That Affect Age Verification

While using a credit card-verified system is powerful, it is not foolproof. Fraudsters and unauthorized users can exploit certain vulnerabilities, and platforms must be aware of these specific threats.

1. Card-Not-Present (CNP) Fraud

CNP fraud occurs when a card is used without being physically present. For age-restricted content or products, a minor might use a parent’s stolen or borrowed card to make a purchase, bypassing the verification system. These online transactions are particularly vulnerable.

2. Authorized-User / Shared-Card Risk

A significant vulnerability is the use of an authorized user’s card. While the card details are valid and all technical checks will pass, the user is not the cardholder. This is a primary challenge for age verification with a credit card, as the system can’t distinguish between the authorized user and the person actually making the purchase.

3. Prepaid/Gift Card Loopholes

Prepaid or gift cards are often untraceable and do not require personal information for activation. Minors can easily acquire and use them, bypassing the system’s ability to verify a user’s identity or age.

4. Synthetic Identity & Identity Theft

In more sophisticated scams, fraudsters create “synthetic identities” by combining real and fake information to generate a new persona with an apparently legitimate credit history. Additionally, traditional identity theft, where a user exploits a stolen identity, can also circumvent age checks.

5. Friendly Fraud / Chargebacks

This type of fraud happens when a cardholder makes a legitimate purchase but later claims it was unauthorized to get a refund. For age-restricted goods, a parent might dispute a charge made by their child, causing a loss for the business and rendering the original age verification invalid.

Credit Card Fraud Detection Techniques

To combat the persistent threat of fraud, businesses need to go beyond simple verification and employ advanced credit card fraud detection techniques.

1. Real-Time Transaction Monitoring

Real-time transaction monitoring involves a continuous analysis of user behavior and transaction patterns. A sudden flurry of attempts with different cards, or a transaction from an unexpected location, can be instantly flagged as high-risk, triggering an alert.

2. Machine Learning & AI Models

Machine learning and AI are at the forefront of fraud detection in credit cards. These models learn from vast datasets to identify anomalies that would be missed by a human or a simple rule-based system. They can detect subtle shifts in user behavior, such as a different device or a change in purchase habits, to identify potential fraud.

3. Multi-Factor Authentication (MFA)

MFA adds an extra layer of security by requiring a user to provide two or more forms of verification. This could be a password combined with a one-time code sent to a mobile device, making it significantly harder for a fraudster to use a stolen card.

4. Alert Systems & Consumer Notifications

Alert systems can notify cardholders of suspicious activity in real-time. For an age-restricted purchase, an instant text or email alert to the cardholder can help them stop an unauthorized transaction before it’s fully processed.

Credit Card Fraud Prevention Strategies

While detection is key, prevention is the ultimate goal. Here are some of the most effective credit card fraud prevention strategies that work in tandem with age verification.

1. Tokenization & EMV Chip Technology

Tokenization replaces sensitive card information with a unique “token,” which is useless if stolen. Similarly, Europay, Mastercard, Visa (EMV) chip technology makes it nearly impossible for fraudsters to create counterfeit cards, dramatically reducing the risk of fraud in the first place.

2. Secure Payment Gateways & PCI DSS Compliance

A secure payment gateway is a business’s primary line of defense. By using a Payment Card Industry Data Security Standard (PCI DSS) compliant gateway, businesses ensure that all sensitive cardholder data is handled with the highest level of security, protecting against data breaches.

3. User Education & Awareness

Educating users is a simple yet powerful strategy. By informing them of the risks of sharing credit card information and encouraging them to use strong passwords and multi-factor authentication, businesses can empower their customers to be part of the solution.

4. Collaboration with Financial Institutions

Building strong relationships with banks and card issuers can lead to more effective fraud prevention. By sharing data and leveraging the institutions’ own robust fraud-detection systems, businesses can stay ahead of new threats and protect their transactions.

5. Credit Freezes & Fraud Alerts

For consumers, placing a credit freeze or fraud alert on their credit file is an effective way to prevent identity theft. This makes it difficult for a fraudster to open a new account in their name, offering an additional layer of protection.

Industries Using Credit Card Age Verification

Credit card age verification is widely used in industries that must comply with strict legal regulations for age-restricted goods and services. By verifying a customer’s age, businesses can ensure they meet compliance standards while promoting responsible usage of their products or services. Key sectors include:

• Ecommerce: Online retailers selling age-restricted products such as alcohol, tobacco, vaping products, or other items subject to legal age limits rely on credit card verification as a safeguard against underage purchases.
• Online Gambling: To comply with regulatory requirements and prevent underage participation, gambling platforms use age verification to ensure users meet the legal age criteria, promoting safe and responsible gambling practices.
• Streaming Services: Platforms offering age-gated content, including movies, series, or subscriptions to adult-only sections, use credit card verification to control access and adhere to content rating guidelines.
• Alcohol and Tobacco Sales: Vendors of alcohol, tobacco, and similar products must restrict access to individuals of legal age. Credit card age verification helps them comply with laws by screening buyers before the sale is completed.

By implementing credit card age verification, these industries not only stay compliant but also build trust by prioritizing customer safety and adhering to ethical standards.

Wrapping Up

Credit card age verification has been a widely used solution for businesses aiming to safeguard age-restricted products or content. It offers advantages such as convenience, real-time verification, and ease of integration. However, its drawbacks – like privacy concerns, potential fraud, and user exclusion – cannot be ignored.

For businesses seeking a more robust solution, alternatives like government ID verification and biometric authentication, which FTx Identity offers, can offer greater accuracy and security. Each method has its strengths, but the ultimate selection should align with your business’s compliance needs and user experience goals.

While credit cards may remain a part of the age verification process, the evolution of more sophisticated methods highlights the ongoing demand for innovation in this field.

Want to explore how FTx Identity can elevate your age verification process? Contact us today to schedule a consultation and see our cutting-edge solutions in action with a demo!