It is an authentication procedure established by credit card companies to further efforts towards reducing fraud for internet transactions. It requires a card holder to enter the CVV number at the time of transaction to verify that the card is on hand. The CVV code is a security feature for "card not present" transactions (e.g., Internet transactions), and now appears on most major credit and debit cards. This feature is a three or four digit code which provides a cryptographic check of the information embossed on the card.
The CVV code helps ascertain that the customer placing the order actually possesses the credit/debit card and that the card account is legitimate. Each credit card company has its own name for the CVV code, but it functions the same for all major card types. VISA refers to the code as CVV2, MasterCard calls it CVC2, and American Express calls it CID.
The back panel of most Visa and MasterCard cards contains the full 16-digit card number, followed by the CVV/CVC code. Some banks, though, only show the last four digits of the card number followed by the code. To aid in the prevention of fraudulent credit card use, we require the 3 or 4 digit code on the back of the credit card when submitted for payment. The submitted credit card information is protected by Secure Socket Layer (SSL) technology.