Visa Chargeback Monitor Program Enforcement and Chargeback Fee Assessment
As of January 2016, Visa changed their chargeback monitoring programs. Prior to January 2016, Visa had two distinct programs for merchants who have a high number of chargebacks:
- S. Merchant Chargeback Monitoring Program: U.S. merchants who were experiencing more than 100 chargebacks a month and a chargeback ratio over 1% were automatically enrolled. Merchants did not have a say on whether they were in this program or not. The goal of this program was to work with merchants to help them lower their chargebacks and ultimately help them save on their chargeback fees.
- Global Merchant Chargeback Monitoring Program: This program applied to merchants who operate internationally and had over 200 chargebacks a month and chargeback ratio of 2%.
It should be noted that merchants did not have control over their forced enrollment in these two programs. From Visa’s perspective, this was the best way to monitor merchants, identify problems, and work with merchants to reduce chargebacks, the chargeback ratio, and the inherent chargeback fees.
Now, as of January 2016, these two programs have been combined into one program: Visa Chargeback Monitoring Program.
What is the Visa Chargeback Monitoring Program?
In its simplest form, the Visa Chargeback Monitoring Program (VCMP) is essentially a combination of the U.S. Merchant Chargeback Monitoring Program and Global Merchant Chargeback Monitoring Program. However, the major difference is that the higher threshold limits of the Global Merchant Chargeback Monitoring Program have been discarded.
With VCMP, any merchant who has 100 or more chargebacks a month and a chargeback ratio of 1% is automatically enrolled in the program. This applies to both U.S. and international merchants.
To calculate the chargeback ratio, only Visa chargebacks and sales in a given month are taken into consideration. The number of Visa chargebacks for January, for example, is divided by the number of Visa sales for the same month. This number is your Visa chargeback ratio. Higher than 1% and you’re automatically enrolled in VCMP.
You might be wondering why Visa has such a program. Just like you, Visa wants to ensure brand reputation, and when Visa has too many merchant customers who are experiencing high levels of chargebacks and swelling chargeback ratios, this does not help them foster a good brand reputation among issuers. This is one of the reasons why your chargeback fees can increase with the more time your issuer spends on chargeback disputes. This translates into higher fees for you.
VCMP is designed to help keep merchants involved and invested in their chargeback status. For many merchants, paying attention to and managing chargebacks is an after-thought. However, for issuers, the costs of chargebacks are always at the forefront. By forcing enrollment in a program such as VCMP, Visa is hoping to make high-risk merchants more aware of the impacts chargebacks and the chargeback ratio have on business success and longevity.
What can you do to avoid enrollment in VCMP?
This is perhaps the most critical question to ask yourself when it comes to your ability to do business. Quite simply, to avoid enrollment in VCMP you need to be involved and pay attention.
You need to be different from your competitors and make chargebacks, chargeback management, fraud prevention/detection, and customer insight part of your business process. This means you need advice from experts, such as the people we have at Verifi, and you need to take advantage of the deep pool of resources and solutions available to you.
Today in 2017, there really is no excuse for you to say, “I didn’t know about chargebacks” or “I couldn’t find out anything about how to manage chargeback ratio.” There are many solutions available to you, from those that can be installed and up-and-running in mere minutes to those that are more extensive and require more hands-on attention from our team of experts. Contact us to talk about your chargebacks, chargeback ratio, and your chargeback fees. We can help you find the solution that works best for your business.
No one wants to admit that they don’t have enough understanding. But when it comes to the longevity of your business, we want you to speak up and tell us when you need more information about chargeback fees, fraud prevention, customer insights, and programs such as VCMP.
Whether you think your chargeback ratio might be nudging up against 1% or you know that your ratio is well below this threshold, it’s in your best interest to take some action. If you’re not using a solution to help you detect potential fraud, detect problem customers, and provide analysis for your business, you are going to fall behind––regardless of your current chargeback ratio. Don’t get left behind. Contact us and get the real expert help that can place and keep your business at the front.