Card schemes like Visa and Mastercard track monthly disputes (also known as chargebacks) against your sales. If the number of disputes exceeds the acceptable limit set by the card scheme, your business might be enrolled in a monitoring program.

If you are accepted into the program, the system may charge you monthly penalties and additional fees until you reduce the number of disputes to an acceptable level.

Visa uses descriptors to group and calculate fraud rates, allowing transactions to be linked to specific merchants, goods, and services. The formula for fraud rate is the percentage or amount of fraud per month divided by the total sales or amount for that month. Only the first 10 chargebacks or fraud alerts per card are counted, excluding fraud type code 3 (application fraud).

Mastercard uses Merchant IDs (MID) to group transactions and assess fraud levels. The formula is the number of chargebacks per month divided by the total number of successful transactions the previous month, considering only the first 35 chargebacks from the same card.

Other card systems like American Express, Discover, Diners, and JCB identify merchants by their account ID and calculate fraud rate using the formula: either the number of chargebacks or the amount of fraud in a month divided by the total number of successful transactions or total sales amount for the same month.

Visa

Visa has established two monitoring programs to identify merchants with excessive disputes and/or fraud and to promote the use of fraud controls and fair business practices.

The Visa Dispute Monitoring Program (VDMP) and the Visa Fraud Monitoring Program (VFMP) run monthly for 12 months.

At the beginning of each month, Visa reviews the previous month’s processing activity and identifies merchants that exceed the program’s thresholds. Your company must exceed both thresholds to be enrolled in the program.

Visa calculates the ratio of disputes to sales as follows: the number of disputes you received in a month divided by the number of sales you processed in that month multiplied by one hundred.

Visa’s Fraud Monitoring Program for 3D Secure (VFMP 3DS) is designed for US customers to monitor and manage domestic 3D-Secure transaction fraud.

The fraud ratio for VFMP-3DS is calculated by dividing the amount (in USD) of fraud reported on 3D Secure transactions in a given month by the amount of sales processed through 3DS in the same month.

Timeline, Fines, and Fees:

• Early Warning: No fines or additional fees are imposed for receiving an early warning.
• Remediation: If your account stays below the standard program thresholds for three consecutive months, it will be removed from VFMP-3DS.

VDMP

VFMP

VFMP 3DS

VAMP

On April 1, 2025, Visa will retire VDMP and VFMP and change its fraud and dispute management approach. Visa consolidates those monitoring programs into the enhanced Visa Acquirer Monitoring Program (VAMP). VAMP aims to create more seamless controls and processes for acquirers and merchants to prevent fraud, avoid enumeration attacks, and effectively manage disputes, contributing to a more secure environment. The revised program introduces transaction-based metrics called the VAMP Ratio and VAMP Enumeration Ratio.

VAMP Ratio

This metric combines fraud and non-fraud chargebacks into one measure, offering a clearer view of overall risk.

The Visa monitoring metrics thresholds, categorized as Above Standard and Excessive, will be implemented in two phases, on 1 April 2025 and 1 January 2026.

Additional criteria for merchant and acquirer thresholds: minimum of 1,000 monthly combined TC40 and Non-Fraud Disputes.

VAMP Enumeration Ratio

This metric measures the frequency of enumeration attacks, where fraudsters systematically test card details to uncover valid account information.

The Visa monitoring metrics threshold for the VAMP Enumeration Ratio is categorized only as Excessive.

Additional criteria for merchant and acquirer thresholds: minimum of 300,000 enumerated transactions, identified and confirmed through the Visa Account Attack Intelligence ( Glossary
Visa Account Attack Intelligence Score helps identify the likelihood of enumeration attacks in card-not-present transactions. It is able to detect patterns in data that are otherwise undetectable by humans, identifying instances of brute force payment account enumeration. VAAI ) Score system.

Non-compliance may lead to corrective actions, including penalties, fees, and potential closure of merchant accounts.

VAMP penalties

Starting in the fourth month, fines will be applied to each transaction counted under the VAMP metric, including both fraud and non-fraud. Enforcement fees apply per dispute both fraud and non-fraud for acquirer portfolios that exceed the above standard threshold. Merchants that exceed such thresholds will face enforcement fees individually.

• Merchant Fees:
  • Excessive (VAMP Ratio > 1.5%): $10 fee
  • Excessive (VAMP Ratio > 0.9%): $10 fee, effective January 2026
• Acquirer Fees:
  • Excessive (VAMP Ratio > 0.5%): $10 fee
  • Above Standard (VAMP Ratio > 0.3%): $5, fee effective 2026

VAMP grace period

The grace period covers a 3-month grace timeframe for first-time identifications in a 12-month rolling period. That means remediation will be requested, but no penalties will be imposed during the first three months of exceeding the thresholds.

Participants will exit the program if they remain below the thresholds for one month.

Mastercard

Mastercard operates the Mastercard Acquirer Chargeback Monitoring Program (ACMP), which includes two tiers: Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM). Your placement in either of these tiers depends on the total number of chargebacks received in a month and the ratio of chargebacks to revenue in that month. You will be notified if your business falls under this program.

Mastercard uses the merchant account ID to identify merchants. Each month, they review all merchant accounts that surpass certain threshold limits. Your chargeback ratio is measured in “basis points,” which Mastercard uses to determine the appropriate program tier for your business.

The calculation of basis points is as follows: The number of chargebacks in a specific month is divided by the number of Mastercard transactions processed in the preceding month, then multiplied by 10,000.

ECM

The ECM program, established by Mastercard, is crafted to streamline enforcement and handle quicker interactions between acquirers and card networks. Its primary objective is to enhance the accuracy and accountability of the merchant compliance process. As a chargeback control initiative, the ECM program focuses on monitoring e-commerce merchants to curb excessive chargebacks within the Mastercard network.

The ECM program aims to keep chargeback levels within acceptable limits by monitoring merchant activities and imposing fines for non-compliance, thus preserving the Mastercard network’s integrity and encouraging improved transaction and dispute management among merchants.

EFM

The EFM program by Mastercard streamlines enforcement and accelerates interactions between acquirers and the card network, aiming to enhance merchant compliance accuracy and accountability.

American Express

American Express (Amex) operates as both a card network and an issuing bank, providing businesses with tools to manage transactions while reducing fraud and chargeback risks. Like Visa and Mastercard, it has its programs to monitor merchant performance, dispute trends, and fraud activity.

• Fraud Full Recourse program restricts merchants who exceed Amex’s chargeback threshold from disputing fraud-related chargebacks, with Amex expediting these chargebacks and denying reversal requests.
• Immediate Chargeback program applies to merchants with excessive overall chargeback rates, skipping the standard inquiry process. Disputes are processed instantly with a special reason code, reducing the merchant’s ability to challenge them.
• Partial Immediate Chargeback program targets merchants with high chargeback rates but only bypasses the inquiry process for transactions under a specific dollar amount, providing a targeted intervention while allowing normal dispute processes for higher-value transactions.

These programs encourage merchants to improve transaction quality and dispute management practices.

Fraud Full Recourse

The Fraud Full Recourse program is an Amex compliance initiative aimed at managing merchants who exceed the threshold for chargebacks. If a merchant surpasses the acceptable limit for fraudulent transactions, the program allows Amex to expedite chargebacks with a fraud reason code and denies the ability to request a reversal. In this situation, the merchant loses the right to dispute fraud-related chargebacks, and Amex assumes liability for any claims. Merchants in this program cannot submit documentation to reverse chargebacks, even if they believe the transaction was valid, unless they can prove they have already issued credit, meaning refund, to the cardmember for the amount of the disputed charge.

A merchant is placed in the Fraud Full Recourse Program if they:

• engage or participate in fraudulent, collusive, deceptive, or unfair business practices.
• are involved in illegal activities or prohibited uses of the card.
• have a fraud-related disputed charge volume that falls into either a Low Tier or High Tier Fraud-to-Gross (FTG) calculation.

Exit conditions

A merchant is removed from the Fraud Full Recourse program if either of the following occurs:

• Fraud-to-Gross (FTG) performance stays below 0.9% for three consecutive months
• Total fraud-related disputes remain below $25,000 for three consecutive months

Amex reserves the right to remove merchants from the program at its sole discretion.

Immediate Chargeback

The Immediate Chargeback program targets merchants with high chargeback rates. When a merchant exceeds Amex’s chargeback threshold, Amex bypasses the standard merchant inquiry process and immediately processes chargebacks with a special reason code. This program addresses merchants who may be using outdated fraud detection tools or failing to implement essential security measures.

A merchant is placed in this program if the chargeback threshold is exceeded for three consecutive months.

Implications

• Amex may issue chargebacks without sending an inquiry if a cardmember disputes a charge for any reason other than actual or alleged fraud.
• Excessive Chargeback Fee for each chargeback after the 1% chargeback ratio threshold has been reached.

Partial Immediate Chargeback

The Partial Immediate Chargeback program is a more flexible approach for merchants with high chargeback rates. In this program, Amex bypasses the inquiry process only for transactions under a specific dollar amount while still processing inquiries for higher-value transactions. This targeted intervention helps Amex manage high chargeback rates while keeping some standard dispute processes for larger transactions.

A merchant is placed in this program if the chargeback threshold is exceeded for three consecutive months.

Implications

• Transactions below a set amount may be charged back without an inquiry if a cardmember disputes the charge for any non-fraud reason.
• Disputed amounts above this threshold follow the standard Amex Chargeback and Inquiry policy.
• Excessive Chargeback Fee applies to each chargeback exceeding the 1% threshold.

General dispute flow

When a charge is disputed, Amex first attempts to resolve it directly with the cardmember. If the issue remains unresolved, Amex may issue an Inquiry or an Upfront chargeback.

If Amex sends an Inquiry notice, the Merchant Services Provider (MSP) forwards it to the merchant, requesting supporting documents. The merchant must respond within the given time frame to provide evidence for dispute resolution. If Amex has already gathered enough information from the cardmember, it bypasses the Inquiry and issues a Chargeback notice, which follows the same process.

The final resolution depends on the notice type and merchant’s response:

• Inquiry
  • If the merchant submits sufficient documents on time, the dispute may be resolved in their favor.
  • If the response is late or lacks evidence, Amex processes a chargeback.
• Upfront chargeback
  • If the merchant provides strong supporting documents on time, Amex may reverse the chargeback.
  • If the response is insufficient or delayed, the chargeback stands.

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