What is the VCMP?
The Visa Chargeback Monitoring Program, or VCMP, is a tool used by Visa to track chargebacks. While you as a merchant have an interest in chargebacks and how they affect your business, so does Visa.Excessive chargebacks can affect Visa’s business, so they want to make sure that merchants are experiencing as few chargebacks as possible.
The VCMP works by placing merchants with excessive chargebacks in this program and monitoring them more closely than they do other merchants. Should you be informed of excessive chargebacks by your payment processor, you should be quick to work with them to implement a chargeback reduction plan—and then stick to that plan. Your payment processor also has a vested interest in reducing your chargebacks, as Visa charges them for every month that you do not have a chargeback reduction plan in place. This is bad news for you, as you can imagine, because your payment processor will pass those charges on to you.
If you continue to experience high chargeback rates,your processing account may be terminated and you may be placed on MATCH, which spells disaster for your business.
What is the VFMP?
The Visa Fraud Monitoring Program is a little different. If you receive an excessive fraud warning, you may put you in the VFMP. While merchants are susceptible to fraud by third parties, what Visa is really trying to determine is if you are committing fraud or not. Similar to the VCMP, if you continue to receive excessive fraud claims you may be placed on MATCH and have your processing account terminated.
The Chargeback Reduction Plan
What should your chargeback reduction plan consist of? Well, if you don’t have any fraud prevention tools in place, such as Verified by Visa, AVS, or CVV, including them would be a good start. Next, determine why your customers are filing chargebacks and from there, change your practices to reduce them. For example, if you are experiencing a high volume of chargebacks because there is no easy way to request a refund from your business, make sure that there is a way to obtain a refund easily on your website. If you stay chargeback and fraud-free for three consecutive months, you can be removed from these monitoring programs.
Changes As Of October 2019
On October 1, 2019, Visa changed the thresholds for the number of monthly chargebacks or incidents of fraud that land you an early warning, a standard warning, or being labeled excessive (and placed in the monitoring program).
For the VCMP, 75 chargebacks and a 0.65% chargeback ratio will get you an early warning, while 100 chargebacks and a 0.9%chargeback ratio will result in a standard warning, and 1,000 chargebacks and a 1.8% chargeback ratio will result in being labeled “excessive”.
For the VFMP, $50,000 and 0.65% of sales value being incidents of fraud results in an early warning, while $75,000 and 0.9% of sales value will get you a standard warning, and $250,000 and 1.8% of sales value is considered “excessive” and will place you in the VFMP.
In order to stay on Visa’s good side, it is imperative to heed their warnings and do all that you can to reduce fraud and chargebacks. Work with your payment processor to achieve this goal, and keep your business running smoothly.