Card networks such as Visa and Mastercard monitor every merchant’s chargeback and fraud activity to ensure compliance with their program thresholds. As part of your financial obligations to these networks, it’s important to maintain your dispute (chargeback) and fraud levels within acceptable limits.

If activity exceeds the thresholds established by a network, your merchant account may be placed into that network’s monitoring program—for example, Visa’s Acquirer Monitoring Program (VAMP) or Mastercard’s Excessive Chargeback and Fraud Monitoring Programs (ECM/EFM).

Participation in a monitoring program can result in network-imposed fees, remediation requirements, and closer oversight until your performance improves in a sustained manner.

The TabaPay Fraud Risk & Chargebacks team will proactively monitor your chargeback and fraud ratios. You will be notified if your metrics approach or exceed a network threshold.

The Fraud Risk & Chargebacks team will partner with you to:

• Review your chargeback and fraud data
• Identify potential root causes (such as policy, product, or process gaps)
• Develop a targeted remediation plan to reduce ratios and bring your program back to compliance

TabaPay will coordinate directly with your sponsor bank and card networks to ensure timely reporting and alignment on next steps.

Merchant Responsibilities

To maintain compliance and minimize exposure to network programs, merchants are responsible for the following:

• Monitor performance: Track monthly dispute and fraud ratios for Visa and Mastercard using consistent transaction data sources using the daily chargeback reports and daily fraud reports that are delivered to you.
• Investigate causes: Review spikes in chargebacks or fraud to determine underlying issues (e.g., customer experience, fulfillment, refund policies, or card testing).
• Implement corrective actions: Update controls, add fraud tools (e.g., 3DS, ANI, AVS, Card query), or adjust customer-facing policies to mitigate recurring issues. Review the list of Risk & Fraud products.
• Respond promptly: Engage with TabaPay within required timeframes if notified that your ratios are nearing or exceeding thresholds. Set your ratios to lower thresholds for proactive monitoring.
• Provide documentation: Supply remediation plans, operational changes, or evidence requested by TabaPay, the sponsor bank, or the networks.
• Maintain transparency: Inform TabaPay of any product, traffic, or processing changes that could materially affect risk or dispute volumes.

TabaPay and its sponsor banks will continue to support you with data, best practices, and ongoing monitoring to help ensure long-term compliance and sustainable growth.

If you need assistance with any report delivery, please reach out to [email protected]

Mastercard

Excessive Chargeback Program (ECP)

Merchants are evaluated under two categories, Excessive Chargeback Merchant (ECM) and High ECM (HECM). A merchant's status in the Excessive Chargeback Program will not be reset until there are three consecutive months below the ECP thresholds.

Monthly chargebacks are defined as all first presentment chargebacks with a processed date within the violation month. Bps are the number of chargebacks received by the acquirer for a merchant ID in a calendar month divided by the number of Mastercard transactions processed for the merchant ID in the preceding month, and then multiplied by 10,000.

Excessive Chargeback Merchant (ECM)

Merchants are considered noncompliant in the ECM category when all of the following are true:

1. Baseline: 1 chargeback and 25 or more cleared transactions for each MID
2. The total number of chargebacks is greater than or equal to 100
3. The total number of chargeback bps is greater than or equal to 150

High Excessive Chargeback Merchant (HECM)

Merchants are considered noncompliant in the High ECM category when all of the following are true:

1. Baseline: 1 chargeback and 25 or more cleared transactions for each MID
2. The total number of chargebacks is greater than or equal to 300
3. The total number of chargeback bps is greater than or equal to 300

*Issuer recovery assessment applies at EUR/USD 5 for each chargeback over 300 chargebacks. For example, a merchant with 500 chargebacks would be assessed EUR/USD 1,000 in issuer recovery (500-300 = 200 x EUR/USD 5 = EUR/USD 1,000)

Excessive Fraud Merchant (EFM)

Merchants are considered nonperforming when all of the following conditions are met in a given month:

1. Baseline: 1,000 e-commerce transactions (by MID) in Clearing
2. The total dollar amount (or local currency equivalent) of fraud-related chargebacks is greater than or equal to EUR/USD 50,000. Monthly fraud-related chargebacks are defined as those first presentment chargebacks processed within a calendar month under the 4837 (No cardholder authorization) message reason code.
3. The total number of fraud chargeback basis points (BPS) is greater than or equal to 50. Basis points are the number of chargebacks received by the Acquirer for a Merchant in a calendar month divided by the number of Mastercard Transactions in the preceding month acquired for that same Merchant and then multiplied by 10,000.
4. The percentage of monthly clearing volume processed using 3DS (including Identity Check Insights [IDCI] transactions) or DSRP is less than 10 percent in nonregulated countries, or less than 50 percent in regulated countries. The term non-regulated refers to those countries without a legal or regulatory requirement for strong cardholder authentication. The term regulated refers to those countries with a legal or regulatory requirement for strong cardholder authentication. The US is a non-regulated country.

❗️

Excessive Fraud Merchant

A merchant identified as an Excessive Fraud Merchant (i.e. noncompliant) will not be assessed as an Excessive Chargeback Merchant.

Visa

Visa VAMP Change Effective April 2026

VAMP Threshold for all merchants: 1.5% (150 bps). Please review below how to monitor your VAMP ratio using the daily chargeback report and daily reported fraud reports.

Beginning January 1, 2026, Visa will implement the next phase of its Visa Acquirer Monitoring Program (VAMP) enforcement, which includes stricter performance thresholds for acquirers and merchants. Under the updated program, acquirers whose portfolios exceed these limits may incur enforcement fees from Visa on a per-dispute or per-fraud-incident basis.

Note: These fees are charged to the acquirer and will be passed through to clients (merchants) whose activity contributed to the elevated ratios.

This change is part of Visa’s multi-phase rollout of VAMP, which started with advisory and enforcement actions in 2025 and continues with tighter standards in 2026. Clients should be aware that higher fraud and dispute rates under VAMP not only increase monitoring activity but also exposure to fees that can be applied by the acquirer and passed along in accordance with their merchant agreement.

It is recommended to proactively monitor their Visa fraud and dispute performance and work with their risk and fraud teams to reduce avoidable chargebacks and fraud events to stay below applicable VAMP thresholds.

Note: The denominator reflects settled Visa CNP transactions from the prior calendar month, NOT the current period. Only card-not-present transactions (e-commerce, MOTO) are included; in-person and non-Visa transactions are excluded.

Visa Acquirer Monitoring Program (VAMP)

The Visa Acquirer Monitoring Program (VAMP) replaces the prior Visa merchant monitoring programs (VDMP and VFMP) and consolidates both dispute and fraud metrics into a single count-ratio framework.

At the beginning of each month, VAMP identifies merchants that have exceeded the program thresholds for fraud and chargeback activity. Visa requires that issuers report on all transactions reported as fraudulent by the cardholder, regardless of whether a chargeback is filed or whether a 3DS liability shift applies. A merchant's fraud activity is based on these reported fraud records (TC 40) and the chargeback records (TC15). The VAMP ratio uses CNP settled transactions processed in the previous calendar month.

Thresholds & Timelines

• Enforcement begins October 1, 2025. Implementation began June 1, 2025
• For merchants in many regions (US, Canada, EU, Asia Pacific)
  • 1.5% (150bps) on April 1, 2026
  • Minimum monthly count of fraud + dispute incidents for program trigger: ~1,500 transactions
  • All assessed fees associated with any Network Monitoring Program (Visa/Mastercard) will be passed along to the merchant. Merchant is liable if their program enters into any network monitoring program.

---

Additional Metrics - Enumeration Program

• Merchants may also be evaluated on enumeration activity. If the “Enumeration Ratio” (enumerated authorization attempts ÷ total authorizations) exceeds ~20% (2,000 bps) and the enumeration transaction count exceeds ~300,000 in one month, VAMP enforcement may apply.

Discover

Discover Excessive Dispute Fee

Rate: $25,000 per month

In the United States, this fee triggers only when a merchant meets all three of the following conditions in a single month:

1. 500 or More Net Sales Transactions: (Gross Card Sales minus returns)
2. 500 or More Chargebacks
3. The 1% Dollar Ratio: The total dollar amount of chargebacks must equal or exceed 1% of the merchant's "Net Sales Volume"

Failure to maintain acceptable levels of disputes results in significant financial penalties

Discover Merchant Fraud Chargeback Levels

Discover calculates merchant fraud levels internally using two primary ratios to identify merchants with "unacceptable" activity:

• UA # Ratio (Frequency): The total number of UA (Fraud – Card Not Present or Card Present) chargebacks divided by the total number of gross Card Sales
• UA $ Ratio (Volume): The total dollar amount of UA chargebacks divided by the total dollar amount of gross Card Sales

Discover’s fraud chargeback thresholds are not universal. Instead, Discover determines if disputes exceed a percentage that is "reasonable or recoverable" specifically for the industry in which the merchant operates. Discover’s internal thresholds are updated dynamically based on "real-time Discover fraud trend alerts" and "merchant risk category updates"

Merchants flagged by Discover for Unacceptable Merchant Fraud Chargeback Levels are considered at risk and will be referred for remediation

---

Recommended actions for Merchants

Merchant ratios directly affect TabaPay. Merchants should take the following steps to ensure their own ratios are monitored internally.

• Track monthly chargeback and fraud counts and settled transaction counts for your Visa portfolio. If you need access to either the daily chargeback or the daily fraud report, please reach out to [email protected]
• Create internal alerts when your ratio reaches ~1.5% (for 2025) or your transaction volume or enumeration activity spikes.
• Deploy and monitor dispute prevention tools and best practices (clear descriptors, transparent shipping/billing policies, use of 3-D Secure, Verifi order insight, rapid dispute resolution tools).
• Be prepared to document remediation plans, root-cause analysis, and prevention controls should you approach or exceed thresholds.
• By proactively tracking and managing your VAMP ratio, you position your business to avoid partner intervention, enforcement fees, and processing interruptions.

---

Remediation Plans

A merchant identified under any of the network monitoring programs must be prepared to provide supporting documentation including, but not limited to:

• Demonstration of sound acceptance practices in compliance with network rules and other applicable standards and requirements.
• Actionable remediation plan that addresses all of the following:
  • Provides an overview of the merchant’s business activities.
  • Describes the root cause of the issue.
  • Lists all prevention tools employed by the merchant (e.g., CVV2, velocity checking, etc.).
  • Details all remediation activities with associated milestone dates.

Contact the Fraud Risk & Chargebacks Team for assistance or a template for remediation plans.