What is the purpose of the credit card security code in ARC transactions?

• A. Verifies the billing address
• B. Confirms the card type
• C. Validates the customer has the credit card in their possession
• D. Approves the transaction

Answer: (C)

The security code on a credit card is used to prove the cardholder actually has the card in their possession, especially in transactions where the card isn’t present (like many ARC workflows). By requiring this code, the system adds a layer of authentication beyond just the card number and expiration date, helping to fend off fraud when the card isn’t physically swiped.

It isn’t used to verify the billing address (that’s handled by address verification) nor to confirm the card type (card type is inferred from the number). It also doesn’t authorize the transaction—the issuer still approves or declines based on funds and risk checks. The possession check provided by the security code is the best match for the purpose described.