Visa and Mastercard roll out changes to fraud and chargeback programs

The global card schemes recently announced changes that will help reduce fraud. The changes take effect in October 2019.

As part of their ongoing efforts to reduce ecommerce fraud globally, Visa is applying new thresholds to its existing programs, and Mastercard has created a new fraud monitoring program.

Visa’s fraud and chargeback updates apply globally

Starting in October 2019, Visa will apply new thresholds to its Visa Fraud Monitoring Program (VFMP) and Visa Chargeback Monitoring Program (VCMP). Visa’s goal is to improve the efficiency of these programs to reduce fraud and disputes while protecting the integrity of the Visa payment system. The new thresholds, effective globally, are as follows: Visa and Mastercard roll out changes to their fraud and chargeback monitoring.

Please keep in mind that in order to be identified in the VFMP and/or the VCMP, both the fraud dollar/chargeback count and rate thresholds need to be met.

Mastercard's new fraud monitoring strategy

In the US, Mastercard’s new program is called the Excessive Fraud Merchant (EFM) Compliance Program. Starting in October 2019, merchants processing Mastercard in the US will be subject to the EFM program. In order for a company to be flagged in the program, all of the following thresholds will have to be met:

  • At least 1,000 ecommerce transactions
  • At least $50,000 USD in monthly net fraud dollars reported
  • At least 50 basis points in monthly net fraud rate
  • 3DS and/or data-only transactions are less than 10% of total card-not-present volume

For example, a company will be identified in the EFM program for the month of October if:

  • They processed at least 1,000 ecommerce transactions in September
  • Received at least $50,000 USD in fraud chargebacks in September. Fraud chargebacks will include the following reason codes:
  • 4871: Chip/PIN Liability Shift
  • 4870: Chip Liability Shift
  • 4863: Cardholder does not Recognize - Potential Fraud
  • 4840: Fraudulent Processing of Transactions
  • 4837: No Cardholder Authorization
  • Has at least 50 basis points in net fraud (where net fraud = count of fraud chargebacks received in September / count of sales for August)
  • The merchant has sent less than 10% of its total card-not-present volume through 3DS and/or data-only

Fines begin next March

Mastercard will start assessing fines for merchants identified in this program starting in March 2020.

With this new Excessive Fraud Merchant Compliance Program, Mastercard is encouraging merchants to adopt best practices towards fraud mitigation, such as implementation of proactive authentication solutions like 3DS or fraud detection tools such as Adyen’s RevenueProtect.

If you have questions about these changes or would like to learn more about how Adyen’s fraud tool RevenueProtect can help you reduce fraud, please contact one of our sales experts.

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