They cannot, because the current format for authorization does not include IP information. The processor can check based on IP/location but that is for the merchant's own fraud mitigation, they cannot pass this information as part of the authorization at present.
Why don’t banks and card processors let users restrict account access by IP location or country for extra security?
How can I create a company-branded “debit card” that works at standard point-of-sale terminals?1 ansCan you walk through the full credit-card payment flow from the payment terminal and swipe to the issuing bank returning an authorization code?1 ansWhat types of organizations are authorized to issue credit cards?1 ansCan payment-card issuers decline a transaction when the merchant does not provide billing-address information?1 ans