Tom-Chris Emewulu
Chief Disputes Analyst
Visa Fraud Monitoring Program (VFMP) is an aspect of Visa’s fiduciary responsibility to its stakeholders, whereby it tracks merchants that get excessive chargebacks and disputes. But it’s not as exciting as you’d think and several vendors seek to avoid the VFMP god’s eye at all costs.

To help vendors curtail different forms of fraud risks and protect their stakeholders, Visa tracks every vendor’s dispute activity. If a vendor reaches Visa’s excessive frauds and disputes threshold, Visa will notify the acquirer; a financial institution that accepts and processes credit and debit card transactions on behalf of the merchant. And with that notification, they will place the vendor in the VFMP to reduce its disputes. 

Fundamentally, they structured the Visa Fraud Monitoring Program into three crucial stages: 

  1. Warning - At this point, you are not already in the program. This warming stage prompts you to take action in ferreting out the causes of the rising fraud levels.
  2. Standard - At the standard VFMP stage, Visa gives you a four-month window to get your fraud issues under control. 
  3. Excessive - This final stage is for vendors that breach the established excessive Visa fraud threshold. Visa places vendors in a high-risk Merchant Category Code (MCC) in this bracket automatically. 

Your Visa fraud rate—“the dollar value of the transactions you lost to fraud over the specified month, relative to total transaction value from the same period”—determines where you fall in the strata.

NOBODY wants to go into the VFMP for several reasons we shall cover below.

Understanding the Visa Fraud Monitoring Program threshold 

On October 1, 2019, Visa switched gears on its fraud mitigation processes by revising the threshold of the VFMP, which has stood for a long time. The table below shows the new thresholds they established to monitor vendors' transactions.

The standard Visa Fraud Monitoring Program enforcement period is eight months. Although Visa does not place fines on vendors for standard VFMP, you don’t enjoy the fraud liability protection privileges. Visa automatically assigns you liability for fraud-related disputes. More so, excessive fraud merchants have a 12-month program in the VFMP, which attracts costly non-compliance fees each month they breach the acceptable threshold.

In essence, Visa is letting you know that your margin of error in avoiding fraudulent transactions is becoming slimmer by moving you into the excessive fraud bracket.  But the good news is, Visa tracks only the first ten fraudulent transactions or ten chargebacks from a particular cardholder. That means if a fraudster uses one card to run multiple attacks on your business in a specific month, Visa will only consider ten of those transactions.

What are the consequences of breaching the Visa Fraud Monitoring  Program thresholds?

Crossing the VFMP threshold will raise your operational costs dramatically—and it could also kill your business. For example, excessive fraud vendors get expensive non-compliance fees for every month they breach the acceptable threshold as follows:

You can only exit the Visa Fraud Monitoring Program after maintaining your fraud rate below the established threshold for three consecutive months. If you manage to navigate through two months, then breach the threshold again, Visa will take you back to square one. 

Further, you can be transferred from a standard VFMP to an excessive-risk VFMP, but not vice versa--Visa does not reclassify a vendor from the excessive-risk monitoring program to the standard monitoring program. Irrespective of their chargeback mediation progress.

Now, it’s important to note that aside from Visa, there are other parties involved in chargeback mediation processes also. Whenever a client or their bank files a transaction dispute, Visa first overturns the transaction from your acquirer. Your bank will then withdraw the transaction value from your account to make up for its loss. 

Even though banks know there are unavoidable chargebacks, standard acquirers and processors often see vendors that get excessive chargebacks as fraud risks. They’d rather drop such vendors, freezing or canceling their accounts before they even breach thresholds.

Without an active merchant account, there’s no way you can process card payments. And you cannot receive new transactions or withdraw available funds either. As one payments expert noted, “They feel you can’t handle your persistent issue of fraud, and by that, do not deserve the benefit of the doubt when a customer claims criminal fraud."

Here's more: Visa can block you from accepting Visa Payments altogether and permanently ban you from their network, which is a probable nail in the coffin for your business. Hence, you must take every precautionary measure available in the book to reduce your fraud exposure risks and avoid the VFMP.

How you can avoid the Visa Fraud Monitoring Program

On average, retailers deal with 442 fraud attempts each month. And being one of the widely-used card networks, Visa is not lenient on fraud cases. If you don’t put in the work to lower your dispute rate, you will lose access to the platform. So, it is wise to prioritize avoiding the Visa Fraud Monitoring Program. 

Below are some recommendations to help you make smarter payment processing moves.

First, get an education on online fraud

If you don’t know what constitutes fraud, you will be their prey at all times. Do you know how to recognize suspicious email addresses? Are you conversant with crime pattern recognition techniques and the latest developments in the market? Do you have tools that can block potentially fraudulent accounts from accessing your platform? If you don’t know how to spot fraud red flags and trends, you can’t safeguard your business as needed. 

Second, review flagged transactions manually

Manually reviewing transactions is a daunting task considering the load of work you have to do. However, pairing a digital assessment with manual review helps increase better judgment. If a vendor receives a fraudulent transaction from a suspicious IP address, they might panic and block all subsequent transactions. But not all of those transactions could be fraudulent, as about 95% of the transactions flagged as doubtful by fraud detection software are legitimate. Chargeflow's dispute and chargeback automation service does the best job of helping you make the best decision in this wise.

Third, get assistance from the experts 

Digital fraud is highly sophisticated these days. If you don't know the art of fraud detection, you will miss their tricks every time. And even if you have a quick eye to sift out every fraudulent transaction, it's an overwhelming task. It makes more business sense to get dedicated external support with reliable tools such as Chargeflow.

Our highly sophisticated, industry-first Fraud Scoring Technique can help you score transactions based on your requirements. You can quickly categorize transactions based on industry standards, recurrent fraud issues, client's zone, and much more. To learn how Chargeflow can help you build a brand that nourishes the world, without the risk of fraud hampering your growth prospects, sign up here.

Average Dispute Amount
Average Dispute Amount
$
30
# Disputes Per Month
# Disputes Per Month
#
50
Time Spent Per Dispute
Time Spent Per Dispute
M
20
calculation
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