Prevent verification in this application is basically giving the merchant the ability to process a transaction without processing from a bank or gift card service.
Gift Cards
In gift cards, STS gift cards can have the option to be "prevent verified." This will allow the merchant to processes their own gift cars with out processing with the STS service.
Credit Cards
Credit Cards can also have "prevent verification" which will allow the customer to bypass the card swipe and process the transaction. This is mainly used for the merchants with a separate machine for their card processing. Transactions are still being tracked for the purpose of reports and the merchants can match their sales on the POS to their credit card machine.