Visa’s New Dispute and Fraud Threshold

Sydney VaccaroIndustry TrendsLeave a Comment

Visa’s New Dispute and Fraud Threshold

Visa has made some changes to the Visa Dispute Monitoring Program (VDMP) and the Visa Fraud Monitoring Program (VFMP). The changes include lowering the thresholds that put merchants on these watch lists.

Visa’s Dispute and Fraud Program Updates

As of October 1, 2019, Visa has implemented the following changes:

Visa Dispute Monitoring Changes 

Old Monthly Threshold

New Monthly Threshold

VDMP Early Warning

0.75% dispute ratio and 75 disputes

0.65%* dispute ratio and 75 chargebacks

VDMP Standard

1% chargeback ratio and 100 chargebacks

0.9%* dispute ratio and 100 chargebacks

VDMP Excessive

2% chargeback ratio and 500 chargebacks

1.8%* dispute ratio and 1,000 chargebacks

*or higher ratio of dispute count-to-sales count

Visa Fraud Monitoring Program 

Old Monthly Threshold

New Monthly Threshold

VFMP Early Warning

0.75% of sales and $50,000

0.65%* of sales and $50,000

VFMP Standard

1.0% of sales and $75,000

0.9%* of sales and $75,000

VFMP Excessive

2% of sales and $250,000

1.8%* of sales and $250,000

*or higher ratio of fraud dollar-to-sales dollar amount

What is the Visa Dispute Monitoring Program?

Visa monitors all merchant disputes activity. Monthly, if any merchant has excessive disputes, Visa will notify the acquirer. Once informed, acquirers are expected to help reduce the merchant’s disputes. Visa says, “merchants should work with their acquirer to develop a detailed dispute-reduction plan which identifies the root cause of the dispute issue and an appropriate remediation action(s).”

These remediation actions will depend on the dispute condition, merchant’s line of business, business practices, fraud controls, and operating environment, sales volume, geographic location, and other factors. The acquirer is required to fill out a VDMP/VFMP Remediation Plan with the merchant. This remediation plan is to help merchants improve their dispute or fraud mitigation efforts to get the merchant out of the risk compliance program.

What the Threshold Changes Mean for Merchants

To stay in the card network’s and other payment partner’s good graces, merchants need to take proactive measures to stay off of VDMP and VFMP. With the lowering of the thresholds, it will be easier for merchants to be put on these lists and possibly lose the ability to process payments.

One way merchants can stop disputes from ever happening and keep their dispute ratio low is using Real-time Resolution (RTR). Real-time Resolution in the Chargeback App enrolls merchants in Visa Merchant Purchase Inquiry (VMPI)—allowing for real-time communication of customer, order, and product detail. With RTR, the issuing bank’s dispute analyst can use transaction details to decide if the dispute is invalid and prevent it from being filed. In cases of friendly fraud, the additional data helps jog the cardholder’s memory about the purchase. And in cases where the cardholder is trying to intentionally misuse their chargeback rights, the extra layer of confirmation acts as a critical deterrent from proceeding with the dispute. To learn more about Real-time Resolution and the possible ROI for your company, you can schedule a demo with one of our dispute experts.