The 3-digit code is located on the back of your card, inside the signature area. Typically the signature panel will have a series of numbers, but only the last three digits make up the CVV2 code.

It’s actually more about what it prevents. When shopping online or over the phone, the 3-digit code helps merchants ensure that the card is in the right hands. Merchants will request the CVV2 at checkout from the cardholder, and the information is sent electronically to the card-issuing bank to verify its validity. Within seconds the CVV2 results are returned with authorization. If it’s returned invalid, merchants have the right to stop the transaction.

And for your added protection, merchants are prohibited from keeping or storing the CVV2 number after the transaction has been completed.