How to stay ahead of seller fraud
In October 2019, Visa started applying new thresholds to its Visa Fraud Monitoring Program (VFMP) and Visa Dispute Monitoring Program (VDMP, formerly known as the Visa Chargeback Monitoring Program). 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 follow:
Please keep in mind that in order to be identified in the Visa Fraud Monitoring Program and/or the Visa Dispute Monitoring Program, both the fraud dollar/dispute count and rate thresholds need to be met.
Mastercard’s new global program is called the Excessive Fraud Merchant (EFM) Compliance Program. Starting in October 2019, merchants processing Mastercard are now 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:
For example, a company will be identified in the EFM program for the month of October if:
Mastercard is updating their existing Excessive Chargeback Program (ECP) with changes to the Excessive Chargeback Merchant program. Starting in October 2019, merchants will be subject to monitoring under Mastercard’s new thresholds for this Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM). The changes in their chargeback program thresholds can be seen in the table below:
As a reminder, Mastercard calculates a merchant’s chargeback rate by comparing chargeback volume in a given month to previous month’s settled transactions. For example, a merchant might be identified as a High Excessive Chargeback Merchant in November 2019 if they received 400 chargebacks in the month of October and settled 12,000 transactions in the month of September (their chargeback rate would be rate would be 333 basis points or 3.33%).
Mastercard will start assessing fines globally for merchants identified in their fraud and/or chargeback program starting in March 2020.
With both their new Excessive Fraud Merchant Compliance Program and the changes to their Excessive Chargeback Merchant 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. Merchants should also adopt best practices for avoiding chargebacks such as having a clear merchant descriptor, issuing proactive refunds, and having a streamlined support team to help address customer concerns.
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