What Is the Visa Chargeback Monitoring Program?

No e-commerce merchant wants to find themselves on the receiving end of chargebacks. They’re expensive, they’re time-consuming, and they can damage online reputations. Now, Visa has thrown a new wrinkle into the mix.

If a merchant’s chargeback rates exceed levels determined by Visa, the merchant is enrolled in the Visa Chargeback Monitoring Program (VCMP). While Visa designed the program to help merchants learn how to more effectively manage (and, as a result, reduce) disputes, VCMP also penalizes these e-commerce businesses for chargeback ratios that are too high.

Here’s what every e-commerce merchant needs to know about the program, from the program’s costs to how to avoid being automatically enrolled.

What the Visa Chargeback Monitoring Program Does

Everyone wants to protect their brand reputation, and Visa is no exception. To help minimize the damaging effects chargebacks can have on individual merchants and on the Visa brand, Visa combined two of its chargeback programs — the U.S. Merchant Chargeback Monitoring Program and the Global Merchant Chargeback Monitoring Program.

The goal of the new unified program is to identify merchants around the world with chargeback problems and incentivize them to improve. When a merchant hits more than 100 chargebacks monthly and a ratio of more than 1%, Visa automatically enrolls the merchant in the new VCMP. As part of this program, Visa closely monitors the merchant’s chargeback levels and encourages the merchant to improve their fraud controls and daily operations.

Note: While the VCMP targets primarily merchants with high chargeback ratios, the program also enrolls merchants Visa deems as “high risk” or those businesses that harm the goodwill of the Visa payment system.

But while the help Visa offers through the program is designed to benefit a business, it’s still “help” that merchants may prefer to avoid.

The Costs of the Visa Chargeback Monitoring Program

Merchants who find themselves enrolled in the VCMP program should know that Visa is closely watching them and any issues they’re having with fraud or noncompliance. As if this increased scrutiny weren’t bad enough, merchants are also subject to program costs, including:

  • Increased fees for each dispute ($50 for merchants in the standard VCMP, and $100 for merchants deemed to have excessive chargebacks)
  • Time- and resource-consuming account reviews
  • Costly review fees that total $25,000 every six months

And these costs are in addition to the fees and penalties a merchant already faces for each chargeback that’s filed.

It’s clear that even if the merchant is only in the VCMP program for a short amount of time, the financial damage can be significant.

Getting Out of the Visa Chargeback Monitoring Program

When a merchant is enrolled in the VCMP, it isn’t always easy to get out. The initial enforcement period is eight months but can go as high 12 months for merchants deemed as having excessive chargebacks, which means enrollment is a bit of a long-term commitment.

One of the first steps a merchant will want to take to be released from the VCMP is to develop a chargeback mitigation plan to reduce chargebacks. This plan, which must be submitted to and approved by Visa, must outline what the merchant believes to be the key sources of their chargebacks and offer a solution for reducing them.

After the initial enforcement period, if merchants can keep their chargeback ratios below acceptable levels for three consecutive months, they’re able to leave the program. But retailers who are unable to control their chargeback levels after being in the VCMP for 12 months can find themselves disqualified and prohibited from accepting Visa payments at all. And that’s enough to force an e-commerce store to close their virtual doors permanently.

How to Avoid Enrollment in the Visa Chargeback Monitoring Program

The best way to avoid automatic enrollment in the VCMP is by preventing chargebacks. And while it may be impossible to prevent every chargeback and fraud attack, there are several steps merchants can take to minimize their risk, including:

  • Offering 24/7 customer service options
  • Posting clear, easy-to-find return and refund policies
  • Keeping all customer communication readily accessible
  • Clarifying the company’s descriptor on credit card statements

Another smart long-term strategy in the battle against disputes is working with a trusted partner in chargeback management.

Partnering with a trusted solution like ClearSale can help merchants recover lost revenue, reduce long-term chargeback exposure, and reduce the risk of having to answer to programs like VCMP.

Interested in learning more about how ClearSale can help keep your chargeback ratio below the VCMP threshold?

Contact one of our experienced fraud analysts today.