What Is A Postal Code And Why Is It Important For Address Verification And Validation?

Melissa IN Team | Address Verification | , , , ,

Did you know that Aurangabad in Maharashtra shares its name with a city in Bihar? Similarly, ‘Pune’ is the name of a city as well as a district in Maharashtra. There are many other cities and districts across India that share names. Cities share names internationally too. There’s a city called Kochi in Kerala and one in Japan. Almost every state in the USA has a community called Springfield. So, how does the postal system ensure your letters and couriers are delivered to the right address – through the postal code system.

What is the Postal Code?

A postal code refers to a system wherein a country is mapped out by a series of unique numbers. Each country has its own postal code system. Addresses in the USA are coded by a 5+4 digit postal code while in the UK, postal codes are a combination of 5 to 7 alphabets and numbers.

In India, the postal code system was introduced in 1972 to simplify mail delivery and eliminate confusion over incorrect addresses. Here, the Postal Index Number(PIN) code has 6 digits. The first digit refers to one of the 9 PIN regions the country is divided into. Of these 8 refers to geographical regions while the 9th is reserved for the Army Postal Service. The second digit refers to the state or sub-region and the third digit refers to the revenue district. The next three digits correspond with the final delivery post offices.

The pin code for Aurangabad in Maharashtra is 431001 while the pin code for Aurangabad in Bihar is 824101. Thus, while cities may share names, no two cities have the same postal code.

Importance of Postal Codes for Businesses

The obvious advantage of having customer addresses with valid postal codes is ensuring that mail and shipments reach the customer without any delays. It also optimizes costs by reducing the chances of courier agents having to return shipments because of failed deliveries.

However, the role of postal codes is not limited to ensuring your post reaches its intended destination. Postal codes are important social identifiers. For example, it can differentiate between rural and urban areas. When it comes to business decisions such as where to open a new store, where to launch services, etc., postal codes play an important role. Let’s say, most of a company’s leads are from a particular postal code. If the brand does not have an outlet in that region, they may decide to open a store in the area to cater to these customers.

Imagine the effects of taking a decision based on wrong postal codes. Instead of opening a new store in city A, the company may open a store in city B which does not have the same demand for their products and services.

Postal Codes and Address Verification

Addresses are an important part of consumer identities and hence, brands must maintain clean, updated address databases for all their customers. The postal code is an important part of this. Here’s how it can help verify addresses.

• Correct errors
Your customer is human and may make a mistake when entering his/ her address. They may spell their city wrong. For example, they may make a typographic error and write ‘Pairs’ instead of ‘Paris’. The postal code can correct such errors and ensure the address in your database is deliverable. This also ensures that bad data does not enter your system.
• Standardize address entries
Similarly, many cities have changed the spelling of their name over the years. For example, ‘Pune’ was earlier spelled as ‘Poona’. By matching postal codes, such details can be standardized according to the local format.
• Complete addresses
Let’s say a customer forgets to enter the state when submitting her/ her address. The postal code can be used to fill in these blanks and complete the customer’s address in the company database. Having the complete address ensures that deliveries can be made on time and boosts customer satisfaction levels.
• Verify Deliverability
Mistaking a single digit in a postal code can make a big difference in deliverability. For example, let’s say, your company makes deliveries only in Delhi. All Delhi PIN codes start with ‘11’. Hence if a customer enters a pin code as 123456 you will instantly know that the address does not fall in your delivery zone. This builds transparency in your system.
• Translate addresses from regional to English
A customer’s postal code tells you not only which state, district and city the customer is in, but also, which part of the city. This is a wealth of information that becomes important when translating addresses from regional languages to English.
• Filter fake accounts
Fake accounts that place fraudulent orders can be detrimental to a company’s profit margins and make their data unreliable. Thus, it is important to verify customer details at every stage. One of the ways fake addresses can be identified is by mismatched postal codes or postal codes that contain special characters. For example, a postal code may be entered as 45**** or 45*+02.
• Comply with regulations
When it comes to storing customer information, companies must comply with a number of stringent regulations. Failure to do so can put them at risk of legal trouble. Verifying and validating postal codes helps organizations ensure that their database has authentic information and thus complies with legal regulations.

Address verification solutions work by comparing postal codes and other address fields with reliable databases such as the government driving license database, etc. Data matching is used to identify errors, make corrections and complete incomplete addresses. It can also help with updating addresses when street names, etc. are changed.
In short, validating postal codes ensures that your company databases are clean, updated and error-free. It’s important to note though that this is not a one-time effort. To stay current, address verification must be made a part of regular procedures.