CVV2/CVC2/CID are new methods of credit card verification for card-not-present transactions.

CVV2, CVC2, and CID are essentially the same method. An additional number is generated (presumably randomly or pseudorandomly and not related to the card number or account holder information) and printed onto the back of the credit card. The new number is not imprinted into the card or stored on the magnetic strip. This is intended to make it harder to use a credit card number captured through mechanical means.

The merchant (a human customer service agent for phone orders or an online order form) requests the CVV2/CVC2/CID number when ordering and checks it with the issuing bank for validity. A reduction in chargebacks of up to 26% by using these methods is claimed by some sources. It should be noted that CVV2/CVC2/CID may not protect against the misuse of card numbers captured through communication interception or "social engineering."

Sources:
http://www.realsol.com/transaccess/cvv21.htm
http://www.realsol.com/transaccess/walk2cvv2.htm
http://usa.visa.com/business/merchants/fraud_basics_cvv2.html
http://www.pentaxtech.com/Order/CCSecurityCode.html

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