Visa fraud and dispute monitoring program (VDMP) thresholds explained

When merchants accept Visa cards at the point of sale, they become responsible for controlling and preventing fraud incidents. So when Visa identifies merchants that generate excessive fraud or dispute activity, it places them in the Visa Dispute Monitoring Program (VDMP) or Visa Fraud Monitoring Program (VFMP). Under Visa’s Core Rules, merchants must keep fraud and disputes under certain thresholds.

What is the Visa Dispute Monitoring Program (VDMP)?

With the Visa Dispute Monitoring Program (VDMP), Visa can monitor merchants that generate excessive disputes. Visa evaluates a merchant’s dispute levels monthly. The VDMP has two program timelines that it may place a merchant in until they can reduce their dispute levels. These are the standard and high-risk or excessive dispute program timelines.

Visa releases merchants from fraud monitoring programs when they don’t exceed program thresholds for three consecutive months. Visa’s program monitoring includes domestic and international transactions in the United States, Australia, Canada, Europe (Germany and the United Kingdom), and Brazil.

VDMP standard and excessive timelines and fees

The VDMP’s standard or high-risk or excessive timelines are 12-month processes in which a merchant’s acquiring bank must complete certain actions. In the first month of the standard timeline, the acquiring bank must notify the merchant that they’ve exceeded dispute thresholds. This is the notification period. In months two through four, the acquiring bank must submit a dispute remediation plan to Visa and implement it with the merchant. This is the workout period.

Months five through 12 are the enforcement period. The acquirer must ensure the plan is working or make adjustments until the merchant’s fraud levels are below program thresholds. Under the enforcement period of the VDMP, Visa can begin charging applicable fees. In month 12, acquirers are subject to non-compliance assessments and fees.

All 12 months of the high-risk VDMP timeline are the enforcement period. Every month, acquirers are subject to non-compliance assessments and fees. In the first month, acquiring banks must review merchant activity to determine the cause of disputes. And they must notify merchants that they’ve exceeded dispute thresholds.

In months two through 12, acquirers must submit a dispute remediation plan to Visa and implement it with the merchant. The acquirer must ensure the plan is working or make adjustments until the merchant’s fraud levels are below program thresholds. Beginning in month seven, acquirers are subject to applicable review fees.

What is the Visa Fraud Monitoring Program (VFMP)?

Visa places merchants in a fraud monitoring program when it deems the merchant generates an excessive level of fraud activity. Visa monitors merchants in the Visa Fraud Monitoring Program (VFMP) according to two program timelines: standard and high-risk or excessive.

Visa evaluates a merchant’s thresholds monthly. Visa releases merchants from fraud monitoring programs when they don’t exceed program thresholds for three consecutive months. Visa’s program monitoring includes domestic and international transactions in the United States, Australia, Canada, Europe (Germany and the United Kingdom), and Brazil.

VFMP standard and excessive timeline and fee changes in April 2021

While merchants are on the standard timeline, Visa has a 12-month process under which the merchant’s acquiring banks must complete certain actions. In the first month of either program, the acquirer must notify the merchant that they’ve exceeded thresholds. This is the notification period.

In months two through four, the acquirer must begin to implement a fraud remediation plan with the merchant. This is the workout period. Months five through 12 are the enforcement period. The acquirer must ensure the plan is working or make adjustments until the merchant’s fraud levels are below program thresholds.

Effective April 2021, once merchants reach month five of the standard timeline, they’re subject to non-compliance assessments (NCA). Assessments start at $25,000 and can be as high as $75,000 by month 10. These apply to transactions in all but the Europe region, where assessments begin at €21,750 and can be as high as €62,250 by month 10.

“Previously, traditional merchants not operating in a high-risk MCC dealt with chargebacks in terms of an expense or a business problem,” explained Rich Stuppy, Chief Customer Experience Officer at Kount. “Now, with this new program, NCAs can be a substantial burden. It means that merchants will need to do a better job of having the controls in place because those dollar values are really significant.”

Merchants move from the VFMP standard timeline to the high-risk or excessive timeline when they exceed the excessive fraud threshold. Visa won’t remove high-risk merchants from the standard timeline, regardless of whether the merchant’s performance drops below the monthly excessive fraud threshold. Visa has a similar 12-month process for acquiring banks whose merchants are on the high-risk or excessive timeline.

Effective April 2021, merchants on the high-risk or excessive timeline are subject to non-compliance assessments in the first month. Assessments start at $10,000 and can be as high as $75,000 by month 10. These apply to transactions in all but the Europe region, where assessments begin at €8,750 in month one and can be as high as €62,250 by month 10.

Fraud prevention solutions can help merchants avoid the VFMP and VDMP

Merchants need to keep a closer eye on fraud risks to avoid Visa monitoring programs. In some cases, merchants can lose Visa acceptance privileges if they can’t reduce their fraud or dispute levels by month 12 of a program. The best way for merchants to avoid Visa’s fraud and dispute monitoring programs is to implement AI-driven fraud and chargeback prevention solutions.

Fraud prevention solutions like Kount Command can help merchants stop bad transactions before they push them over VFMP thresholds. Kount Command uses advanced AI and machine learning to automate risk assessments and block digital payments fraud that can lead to disputes, pre-authorization.

But not all disputes are the result of criminal payments fraud. Merchants that see too many disputes from friendly fraud can push them past VDMP thresholds. With Kount’s Dispute and Chargeback Management solution, businesses can intercept disputes from friendly fraud.

Kount’s chargeback dashboard integrates tools from Verifi, A Visa Solution, to provide a complete solution that intercepts disputes, meets compelling evidence requirements, and deflects chargebacks. Kount’s platform delivers all of the benefits of digital fraud prevention to stop chargeback losses, recover revenue, save sales, and reduce dispute times.