Understand Visa’s Fraud and Dispute Monitoring Program (VDMP) Thresholds and How to Avoid Them

Managing approval rates through fraud and chargebacks can be a tricky balancing act for businesses. The Visa Fraud Monitoring Program (VFMP) and Visa Dispute Monitoring Program (VDMP) reduced their chargeback rate thresholds from 1% down to 0.9% on October 1, 2019. This is definitely a point to be aware of if your business is on the verge of exceeding those limits. These thresholds place more responsibility on merchants to manage their chargeback prevention strategies.

By accepting Visa cards at point-of-sale, merchants become responsible for controlling and preventing their own fraud incidents. Objectives of the programs are to identify merchants that generate excessive dispute activity and reduce fraud. Visa alerts businesses that have met or exceeded these program thresholds for excessive disputes on a monthly basis.

Here is a breakdown of the thresholds that merchants should keep top of mind.

Updated Visa Program Thresholds as of October 2019:

Visa Fraud Monitoring Program (VFMP) Previous Threshold criteria as of October 1, 2019
Early Warning 0.75% of sales and $50,000 0.65% of sales and $50,000
Standard Program $75,000 in fraudulent transactions and 1.0% fraud: sales ratio (dollars) $75,000 in fraudulent transactions and 0.9% fraud: sales ratio (dollars)
Excessive Program $250,000 in fraudulent transactions and 2.0% fraud: sales ratio (dollars) $250,000 in fraudulent transactions and 1.8% fraud: sales ratio (dollars)
Visa Dispute Monitoring Program (VDMP) Previous Threshold criteria as of October 1, 2019
Early Warning 0.75% of sales and $50,000 0.65% of sales and $50,000
Standard Program 100+ dispute count and 1.0% dispute: sales ratio 100+ dispute count and 0.9% dispute: sales ratio
High-Risk Program 1,000+ dispute count and 2.0% dispute: sales ratio 1,000+ dispute count and 1.8% dispute: sales ratio

What Do Visa’s Thresholds Mean for Businesses?

Visa’s stricter thresholds mean merchants need to keep a closer eye on their margin of error when it comes to risk outcomes.

Early warning notifications provide acquirers and merchants an opportunity to reduce fraud and/or dispute levels before a merchant is identified in VFMP and/or VDMP. Merchants placed in the chargeback monitoring program generally have three months to address their chargeback rates, or at least present a plan for doing so. Once a plan is created, they may have a compliance window of three to six months. However, the worst-case scenario? Visa could eliminate a merchant’s account and they would no longer be able to accept Visa payments.

Merchants should take steps now to make sure they maintain adequate chargeback controls in order to stay below program thresholds.

How Kount Helps Businesses Avoid Dispute Thresholds

Businesses dread receiving letters from Visa saying they are in danger of exceeding dispute thresholds. The financial impacts of VDMP and VFMP can be severe, and many ask how they can reduce fraud and chargebacks right away.

Kount Command. They need a solution that delivers fast and immediate results. Kount Command™ helps businesses quickly lower disputes below Visa thresholds. Kount Command protects against digital payments fraud, allowing merchants to achieve the right outcomes around chargeback and decline rates, as well as operational costs.

Near Real-Time Chargeback Prevention. Friendly fraud is often tied to criminal fraud. For businesses that have successfully stopped criminal fraud, it is estimated that 70% of the remaining fraud is friendly fraud. It’s important to note that not all chargebacks have a criminal element—some chargebacks are based on valid customer concerns and can signal errors in a business process that need resolution.

With Kount’s Near-Real Time Chargeback Prevention Solution, businesses can learn to distinguish between friendly fraud and legitimate disputes to apply the right fix. Kount, in partnership with Verifi, A Visa Solution, provides a complete solution to immediately stop chargebacks and manage disputes: businesses can take advantage of the most powerful set of chargeback prevention tools to identify, prevent, and resolve chargebacks without the need for development resources or complex integrations.

AI Enables Effective Chargeback Prevention

Kount helps businesses solve the problem of excessive disputes, both criminal and friendly, with advanced AI. Running dynamic supervised and unsupervised machine learning in parallel, Kount’s AI quickly detects anomalies, provides link analysis, and automatically evaluates and weighs features to quickly identify different types of fraud.

Trained to recognize patterns that have not been seen before, it detects complex and automated fraud in milliseconds. Kount’s AI produces Omniscore, an actionable fraud payments score that simulates the judgment of an experienced fraud analyst.

A robust and comprehensive fraud prevention solution that accurately detects new and emerging fraud trends can help reduce or eliminate chargebacks from criminal and friendly fraud and the associated loss of income

 

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