Visa Dispute Monitoring Program
Calculation
In the Visa Dispute Monitoring Program (VDMP), the chargebacks received during the current month are divided by the number of the transactions processed in the same month.
VDMP has several program timelines – Early Warning, Standard, High Risk, and Excessive.
To be identified as “high-risk”, Merchant’s account should exceed the standard limits and have assigned a high-risk MCC.
Visa may also move merchants into the high-risk timeline based on a review of Merchant’s performance and business practices.
Program Thresholds
| Threshold | Chargeback Count | Ratio | |
|---|---|---|---|
| Early warning threshold | 75 | 0.65% | |
| Standard threshold | 100 | 0.90% | |
| Excessive threshold | 1000 | 1.80% |
Fines
| Month | Program | |
|---|---|---|
| Standard | High Risk | |
| 1 to 4 | No fee | $50 per CHB |
| 5 to 6 | $50 per CHB | $50 per CHB |
| 7 to 9 | $50 per CHB | $50 per CHB, plus $25,000 review fee |
| 10 to 12 | $50 per CHB, plus $25,000 review fee | $50 per CHB, plus $25,000 review fee |
Timeline and Required Actions
Standard Program Timeline
| Program Month | Program Status | Actions | |
|---|---|---|---|
| 1 | Notification | Review the chargebacks, define appropriate actions | |
| 2 to 4 | Workout Period | After beginning the program, the merchant should provide a plan to reduce the chargebacks. | |
| 5 to 11 | Enforcement Period | The merchant must continue to provide updates, with information about the results of the implemented plan. The merchant may be liable for chargebacks related to fraud transactions. The merchant could be closed for Visa processing. | |
| 12 (and subsequent months) | Enforcement Period | The merchant could be closed for Visa processing. |
High-Risk and Excessive Program Timeline
| Program Month | Program Status | Actions | |
|---|---|---|---|
| 1 | Enforcement Period | The merchant should provide a plan how to reduce the chargebacks. | |
| 2 to 5 | Enforcement Period | The merchant must continue to implement plans to reduce chargebacks. | |
| 6 to 11 | Enforcement Period | The merchant must continue to provide updates, with information about the results of the implemented plan. The merchant could be closed for Visa processing. | |
| 12 (and subsequent months) | Enforcement Period | The merchant could be closed for Visa processing. |
Exit Parameters
A merchant can exit the VDMP if it has been below at least one of the program thresholds for three consecutive months. If the merchant is below the program thresholds for less than the required three consecutive months, its program status continues to be counted from the previous identification month.
Visa Fraud Dispute Monitoring Program
To maintain integrity and trust in the Compelling Evidence, Visa has instituted the Visa Fraud Dispute Monitoring Program (VFDMP). Under this Program, Visa applies additional monitoring on merchant-provided compelling evidence qualification data related to fraud disputes to identify acquirers and merchants that provide invalid or falsified qualification data.
If the VFDMP identifies that the data submitted by a merchant is invalid or falsified, both of the following apply:
- The acquirer is contacted and notified of the merchant’s violation of Visa’s rules.
- Until the acquirer confirms in writing to Visa that the underlying issues have been addressed, the merchant is no longer able to remedy a dispute by providing the required qualification data under the Dispute Condition 10.4: Other Fraud – Card-Absent Environment – Pre-Arbitration Processing Requirements.
Mastercard Excessive Chargeback Program
Calculation
In the Mastercard Excessive Chargeback Program (ECP), the chargebacks received during the current month are divided by the number of the transactions processed in the previous month.
The ECP is a Mastercard monitoring program that evaluates Merchants that receive an excessive number of chargebacks on a monthly basis.
Merchants can be identified under two categories – Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM).
Mastercard checks the chargeback performance of each merchant on MID level, not by URL. Refer to the following table for ECM and HECM monthly criteria information.
| Monthly Criteria | Number of Chargebacks | Count Ratio (%) | |
|---|---|---|---|
| ECM | 100 to 299 | 1.5 to 2.99 | |
| HECM | 300 or more | 3 or more |
Non-compliance Assessments
Exceeding the transaction-to-chargeback for the first month incurs no penalty.
Exceeding the ECM for a second and subsequent months incurs a fine calculated according to the following formula:
| Number of Months Above ECM Thresholds | Assessment if ECM in Violation Month | Assessment if HECM in Violation Month | Issuer Recovery Assessment |
|---|---|---|---|
| Violation Assessment | Violation Assessment | ||
| 1 | 0 | 0 | No |
| 2 | 1,000 USD/EUR | 1,000 USD/EUR | No |
| 3 | 1,000 USD/EUR | 2,000 USD/EUR | No |
| 4 to 6 | 5,000 USD/EUR | 10,000 USD/EUR | Yes |
| 7 to 11 | 25,000 USD/EUR | 50,000 USD/EUR | Yes |
| 12 to 18 | 50,000 USD/EUR | 100,000 USD/EUR | Yes |
| 19 + | 100,000 USD/EUR | 200,000 USD/EUR | Yes |
Issuer Recovery Fees = Number of chargebacks over 300 chargebacks * 5 USD /EUR per chargeback. For example, a merchant with 500 chargebacks would be assessed EUR/USD 1,000 in issuer recovery (500-300 = 200 x EUR/USD 5 = EUR/USD 1,000)
Exit Parameters
The retailer location maintains its status in the Chargeback Monitoring Program until its performance is below the program thresholds for three consecutive months.
Last modified August 2024