Next spring, Visa will roll out the U.S. version of its new Visa Acquirer Monitoring Program (VAMP), which goes into effect April 1, 2025. This follows Visa Europe, which rolled out VAMP back in June. VAMP charts a new path for acquirers to manage fraud and chargeback ratios.
While it’s likely more updates will come from Visa ahead of the April launch, it’s important that merchants get up to speed before that — especially since VAMP is a bit confusing. So this month, we focus on what VAMP is, how it will impact merchants and how you can best prepare for it.
VAMP puts pressure on acquirers to manage fraud and disputes to significantly lower levels than ever before, by levying significant fines if acquirers exceed VAMP ratios for longer than three months.
What is VAMP?
VAMP puts pressure on acquirers to manage fraud and disputes to significantly lower levels than ever before, by levying significant fines if acquirers exceed VAMP ratios for longer than three months. VAMP also incentivizes acquirers and merchants to utilize tools Visa has developed to help manage consumer disputes and fraud, by excluding transactions managed through these tools from the VAMP calculation. The tools include Rapid Dispute Resolution (RDR), as well as Consumer Dispute Resolution Network (CDRN) and Compelling Evidence 3.0, both from Verifi.
VAMP will replace and consolidate the existing chargeback threshold and fraud threshold programs to which Visa has been holding acquirers accountable: Visa Dispute Monitoring Program (VDMP), which focuses on monitoring a merchant’s overall chargeback rate, and the Visa Fraud Monitoring Program (VFMP), which targets merchants with a high rate of fraudulent transactions.
How it Works and Compliance Ratios
VAMP shifts the onus of managing chargebacks and fraud from merchants to acquirers. By contrast, current chargeback and fraud programs prescribe ratios merchants must manage to remain in compliance. In case you’re not familiar with these ratios, I will share.
VDMP established early-warning chargeback thresholds at 0.65% and 75 chargebacks, and required merchants in early warning to prepare an action plan. VDMP further established standard noncompliance thresholds at 0.90% and 100 disputes, and excessive noncompliance thresholds at 1.80% and 1,000 disputes. VFMP set fraud early warning at $50,000 in total fraud, set “threshold” at $75,000 in total fraud and “excessive” at $250,000 in total fraud.
When VAMP goes into effect in April, Visa will begin holding acquirers to a VAMP ratio of .50 basis points and higher. Merchants will still be held accountable to the chargeback ratio of .90 or less, but it will be up to the acquirers to manage.
Then, starting Jan. 1, 2026, things will become even more challenging for acquirers. That’s when they will need to manage to a VAMP ratio of .30% and anything greater than .50% will be considered excessive. If an acquirer exceeds the VAMP ratios for more than three months, they will be penalized with enforcement fees.
How Is VAMP Calculated for Acquirers?
Don’t be afraid of the math! In case you are calculating things for yourself, here’s how it works for acquirers. Visa takes the issuer-identified fraud (TC40s) plus nonfraud disputes and deducts the resolved RDR, CDRN and Visa Compelling Evidence alerts. Then it divides by the total number of acquirer transactions.
Here’s an example of what that would look like. Let’s say an acquirer has 2 million transactions in a given month. Of these transactions, 3,000 become service-level chargebacks and 4,000 TC40s are filed against the banks. Merchants resolve 2,000 of the disputes through RDR, CDRN or Visa Compelling Evidence 3.0, so the equation representing the situation is: (3,000 + 4,000 - 2,000) / 2,000,000 = .25. An acquirer with these example stats will be in compliance with the new VAMP program regulations.
What Does It Mean for You?
What this means is that acquirers with a VAMP ratio of .50 basis points will need to review their portfolio and determine the best way to get it into compliance. One option would be for the acquirer to increase their portfolio with merchants who have low chargebacks and fraud, to help lower their overall ratio. However, that might not be as easy as it sounds. It may take time for them to board lower chargeback and fraud business. The other option will be for the acquirer to review their portfolio and mandate use of the tools noted above — or de-risk, meaning eliminate merchants with higher chargeback and fraud ratios.
How to Prepare
Now that these new regulations have been announced, it is important for your risk team to take a look at your portfolio to make sure everything will be in compliance. For instance, we have implemented RDR and CDRN to help our merchants maintain the lowest possible chargeback and fraud ratios. No matter who you’re processing with, it’s important to take time to check in with them to see how these new rules might make an impact.
If you’re processing through your own merchant account, I suggest calculating what your VAMP rate might be. If you’re within the outlined guidelines, your program will be in good shape as the acquirers start reviewing portfolios. If you haven’t implemented Visa’s tools to help manage chargeback and fraud, now is the time to get RDR and CDRN in place. It can only help with your chargeback and fraud rates, and will also help ensure that you don’t become a problem for your current acquirer or payment service provider once VAMP takes effect.
Cathy Beardsley is president and CEO of Segpay, a merchant services provider offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are kept safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@segpay.com.
