It is an important new security feature that now appears on the back of most Visa and MasterCards, and on the front of American Express cards. This new code is a three or four-digit number which provides a cryptographic check of the information embossed on the card.
The security code helps validate that the customer placing the online order actually has the credit card in his/her possession, and that the credit/debit card account is legitimate.
The security code is only printed on the card and it is not contained in the magnetic stripe information nor does it appear on sales receipts or billing statements - you must have the card in your possession in order to use this code.
Card Security Codes are not raised, so they are not scanned into standard credit card readers. In theory, these numbers are only visible to you. When you give your Card Security Code to a merchant, you assist the merchant in verifying that the order is being placed by you, the card holder.
If this code is printed on your card, YES, you must enter the code. Visa, MasterCard, and American Express now require Internet stores to obtain the security code for all cards that have a code printed on them. In order for this transaction to be accepted and processed, you must enter this code if it's printed on your card. This is done for your protection.
Visa and Mastercard Users
Flip your card over and look at the signature box. You should see either the entire 16-digit credit card number or just the last four digits followed by a special 3-digit code. This 3-digit code is your Card Security Code.
American Express Credit Card Users
Look for the 4-digit code printed on the front of your card just above and to the right of your main credit card number. This 4-digit code is your Card Security Code.