Billing Address vs. Shipping Address

What are billing and shipping addresses? Are they the same? Can we use them interchangeably? It can get confusing when you are new to the online shopping game. That is why in today’s post we have decided to tackle the subject and try to explain the differences and similarities between these addresses.

What Are These Addresses?

When you go to a store to purchase an item, you do not need to give addresses. You just pay for the items and take them home. However, in the world of online shopping you need to know how to use the billing address and the shipping address.

To put it simply, the billing address is the address connected to the specific payment method. This payment method is usually a credit or debit card or some type of online payment method, such as PayPal. This is typically the address where one receives their bills, bank statements or invoices.

On the other hand, the shipping address is the address where you wish to send the purchased merchandise. You give the address where the items are to be shipped, which can be your billing address, but it can also be another address.

What Are the Differences Between Them?

The billing address is connected to the form of payment used during the purchase, while the shipping address is where the goods are to be delivered. The shipping address must be a physical location where the merchandise is to be shipped, while the billing address can be an abstract address (such as a PO box) connected to the credit or debit card or other online billing process.

Why Is the Billing Address Important?

At this point, you may ask this question: If we ship the goods to the shipping address, then why does the company need the address connected to your payment method?

The answer is simple: it is for verification purposes. With the age of credit cards and online payment methods, fraudulent activities have increased. This is why the billing address is important!

The billing address MUST match the address the card’s issuing bank has on file! If the address is not correct the payment will be withheld and it will not go through. For this reason, it is of the utmost importance that the billing address with the card’s issuing bank is up to date. If you move, it is your responsibility to notify the bank of the new address, in order for them to update their files.

As we have stated before, the billing and shipping address can be the same, but they often differ. When the billing and shipping addresses are not identical, companies can request additional order verification in order to validate the order and to rule out fraudulent activities.

Billing addresses serve to minimize the possibility of fraud through online purchases. Online merchants can use a service provided by the card network – Visa, MarsterCard, American Express etc., - called the Address Verification System, or AVS for short. This system compares the numeric portion of the billing address given during the checkout process with the billing address the card issuer has on file and if they do not match, the payment will be cancelled. AVS is often used with additional fraud prevention systems, such as the CVV2 or Card Verification Value, values and authorization with the card issuer. This is placed in order to prevent stolen cards from being used.

Conclusion

The billing address is connected to the address your card’s issuing bank has on file. It can be the same as the shipping address (if your billing address is up to date with your bank), but it might also differ (if the address is not up to date, or if you wish to ship elsewhere). The billing address is not the bank’s address.

The billing address must be correct during the checkout, or the AVS will decline the order due to possible fraudulent activities. This minimizes the possibility of stolen credit or debit cards from being used during online shopping.

The shipping address is the physical address where the purchased items are to be shipped. It must be a physical location in order for the delivery to be successful.

While these addresses are mostly similar, the few smaller differences might cause a headache for people purchasing online for the first time. The easiest way to remember which address is which is to look at the first words ‘billing’ and ‘shipping’. The billing address is for statements, bills and invoices, while the shipping address is where the merchandise is to be delivered.