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Remediation

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.

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.

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A merchant identified as noncompliant as an Excessive Fraud Merchant will not be assessed as an Excessive Chargeback Merchant.

Visa

Visa Dispute Monitoring Program (VDMP)

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Visa Dispute-to-Sales Ratio = Dispute Count/Sales Count

All sales activity is determined by using the previous month’s Purchase Date. All disputes are selected based on the previous month’s exception date.

The program will review all disputes and sales transactions by CPD (Central Processing Date) from the prior month. All sales and dispute activity for a merchant associated with an acquirer BID are reviewed in this program.

To limit the impact of account-number concentrations on merchant dispute performance, for purposes of VDMP, Visa will count only the first ten dispute transactions reported to Visa between a merchant and a single account number in a given calendar month. This limitation does not impact an issuer’s obligation to report all fraud to Visa, which may exceed the ten transactions for a given account number at a merchant.

Visa identifies merchants based on dispute month, defined as the month in which the dispute transaction was submitted and processed through Visa. Under VDMP, merchants that meet or exceed performance thresholds will be identified and reported to TabaPay one month following the dispute month. This means that disputes processed through Visa in March will be reported in the April VDMP Identification.

Early Warning

Early Warning notifications give merchants the opportunity to reduce the dispute levels before a merchant is identified under VDMP. The Early Warning thresholds are set at the following level:

1. 75 dispute count; and
2. 0.65 percent (65 basis points) dispute-to-sales count ratio.

Standard

The standard monthly thresholds for merchants are:

1. 100 dispute count, and
2. 0.9 percent (90 basis points) dispute-to-sales count ratio (Dispute Ratio)

Excessive

The Excessive monthly program thresholds for merchants are:

1. 1,000 dispute count, and
2. 1.8 percent (180 basis points) dispute-to-sales count ratio (Dispute Ratio)

High Risk

The High Risk timeline applies to merchants that are categorized by a High Risk MCC as defined in the Visa Rules. In cases where identified merchants cause undue harm to the goodwill of the Visa payment system, Visa may, at its discretion:

• Accelerate identified merchants from the Standard to the High Risk timeline.
• Levy non-compliance assessments and program fees for trailing dispute activity for up to four months after merchant termination, regardless of sales volumes.

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Movement between Program Timelines

• A merchant is identified in only one program timeline at a time.
• Once a merchant moves from the Standard to the Excessive/High Risk timeline, it will remain in the Excessive/High Risk timeline until it completes its remediation by being below the Standard thresholds for three consecutive months.
• If a merchant moves from the Standard to the Excessive/High Risk timeline, the program status will continue from where it was previously.
• To complete remediation and exit the program, the merchant must be below the Standard dispute performance thresholds (100 disputes and/or 1 percent dispute ratio) for three consecutive months.

Visa Fraud Monitoring Program (VFMP)

At the beginning of each month, the VFMP identifies merchants that have met or exceeded the program thresholds for fraud 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). The VFMP uses fraud and sales transactions reported or processed in the previous calendar month.

To limit the impact of account-number concentrations on merchant fraud performance, for purposes of VFMP, Visa will count only the first ten fraud transactions reported to Visa between a merchant and a single account number in a given calendar month. This limitation does not impact an issuer’s obligation to report all fraud to Visa, which may exceed the ten transactions for a given account number at a merchant. Visa also excludes Fraud Type 3 (fraudulent application) from the fraud count in the monthly identification.

Dispute Condition 10.5 liability is applicable to the fraud transactions associated with all months of a merchant’s identification and up to three months for all trailing fraud transactions, regardless of sales volumes.

Early Warning

Early warning thresholds are applicable to all regions for both 3DS and non-3DS transactions

• US$50,000 fraud amount, and
• 0.65 percent (65 basis points) fraud-to-sales amount ratio

VFMP-3DS Monthly Program Thresholds – U.S. Region Only

• US$75,000 domestic 3DS fraud amount, and
• 0.90 percent (90 basis points) U.S. domestic 3DS fraud-to-sales amount ratio.

Standard

• US$75,000 fraud amount, and
• 0.9 percent (90 basis points) fraud-to-sales amount ratio.

Excessive

• US$250,000 fraud amount, and
• 1.8 percent (180 basis points) fraud-to-sales amount ratio.

High Risk

The High Risk timeline applies to merchants that are categorized by a High Risk Merchant Category Code (MCC), as defined in the Visa Rules, or are moved from the Standard timeline to the High Risk timeline based on Visa’s determination that they cause undue harm to the goodwill of the Visa payment system.