How does the Visa Chargeback Monitoring Program work?

The Visa Chargeback Monitoring Program is designed to support merchants in managing better business. As such, Visa expects all of its merchants to be fully up-to-date with its chargeback guidelines and regulations. Before we get into the details of the Visa Chargeback Monitoring Program, we suggest you download the Chargeback Management Guidelines for Visa Merchants.

This guide is written specifically for merchants and provides all the information you need to know about working with Visa. Additionally, you should read Visa Core Rules and Visa Product and Services Rules to make sure you’re familiar with the fundamental rules that apply to all Visa system participants.

How does Visa define a chargeback?

Visa defines a chargeback as “provides an issuer with a way to return a disputed transaction.” Visa also highlights three key reasons for chargebacks:

• You, the merchant, did not get authorization for the transaction.
• You, the merchant, did not collect a card imprint, for electronic or manual sales.
• You, the merchant, accepted an expired credit card.

Visa clearly explains in its documentation how your refund, return, and cancellation policy rules are made available to your customers. As a merchant, knowing and understanding these policies will go a long way in helping you to monitor and manage your Visa chargebacks – ultimately ensuring that you don’t need to worry about chargeback monitoring.

Explain the Visa Chargeback Monitoring Program

Visa monitors your chargeback activity on a monthly basis and will notify your acquirer of any excessive chargebacks. The responsibility is then on the acquirer to work with you to help reduce your chargeback activity. Visa states, “Merchants should work with their acquirer to develop a detailed chargeback-reduction plan which identifies the root cause of the chargeback issue and an appropriate remediation action(s).”

Visa has some general recommendations to help you monitor your chargebacks, including:

• Track your chargebacks based on reason codes.
• Track your chargeback activity as part of your overall sales.
• Track card-present and card-not-present chargeback data separately.

To ensure that merchants are following best business practices and keeping their chargeback activity under control, Visa has three chargeback monitoring programs:

• Visa Merchant Fraud Program
• High Brand Risk Chargeback Monitoring Program
• Global Merchant Chargeback Monitoring Program

Visa Merchant Fraud Program

This program monitors chargeback activity for all U.S. merchants and acquirers monthly. If a merchant meets or exceeds defined chargeback thresholds, your acquirer is notified in writing with a warning.

If after this first warning actions are not taken to solve the problems and lower chargeback rates to the specified levels within a specified time period, Visa may apply financial penalties to the merchant’s acquirer.

Read Visa Core Rules and Visa Product and Services Rules for explicit details on the time periods and penalties associated with the Visa Merchant Fraud Program.

High Brand Risk Chargeback Monitoring Program

This program is specifically designed to target high-risk merchants. The Visa Core Rules and Visa Product and Services Rules details Visa’s list of high risk merchant codes. Examples of high-risk merchants include direct marketers, adult content, online pharmacies, gambling merchants, outbound telemarketers, travel services, and others.

This program applies to all high-risk merchants that meet or exceed specified chargeback thresholds. With the High Brand Risk Chargeback Monitoring Program, there are not a notification or workout period. Merchant acquirers are immediately fee eligible for their high-risk merchants.

With this program, Visa can also accelerate merchants to this program. When this happens, Visa notifies the merchant acquirer of this change and provides information on the new fee liability.

Global Merchant Chargeback Monitoring Program

This program is operated by Visa on a monthly basis and is designed to encourage merchants globally to reduce their chargeback numbers using best business practices. In the U.S., this program augments the U.S. Merchant Chargeback Monitoring Program.

The Global Merchant Chargeback Monitoring Program applies when a merchant meets or exceeds specified international chargeback thresholds. Visa notifies the merchant acquirer in writing about the violation. This initial notification is considered a warning and if the acquirer is not able to reduce the excessive merchant chargeback activity, Visa might impose financial penalties on the acquirer.

Learning More about Visa Chargeback Monitoring

The best way to fully understand Visa chargeback monitoring is to spend time reading the documentation Visa has provided you. It’s also in your best interest to communicate regularly with your acquirer to ensure that you’re up-to-date with any documentation Visa has provided the acquirer.

We suggest that you review the Visa chargeback reason codes that are likely to apply to your business. Also, ensure you’re following the guidelines and recommendations for best business practices as outlined in Chargeback Management Guidelines for Visa Merchants and in Visa Core Rules and Visa Product and Services Rules. As always, the Verifi team is here to answer any of your questions and to provide you with solutions to manage your chargebacks.