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Changes to Visa Chargeback and Fraud Monitoring Programs

Update (11/2017): For the most recent updates to these programs, check out this blog post.

Effective January 1, 2016

At Braintree, we strive to keep you informed of changes in the payments industry, and to assist in optimizing your processing spend. With that, there are some updates to Visa’s chargeback and fraud programs to share.

Summary

With the goal of simplifying current processes internationally, Visa has replaced previous versions of both their chargeback and fraud management programs. The notable changes for merchants include altered thresholds for qualification and accelerated timelines and assessments.

In 2016, merchants who enrolled in legacy Visa chargeback programs before January 1st are given a clean slate -- meaning they will be subject to new standards -- and merchants that are flagged for December 2015 activity will begin month 1 of their applicable program. Take note of outlined timelines below to avoid incurring added fees, which begin in month 5 of the Standard Programs, and month 1 in the Excessive and High Risk Programs.

Now let’s dive a bit deeper into the two new programs.

1. Visa Chargeback Monitoring Program

There are three main facets to the new Visa Chargeback Monitoring Program (VCMP):

a) New thresholds

The VCMP reviews your account’s previous month’s chargeback transactions against that month’s sales transactions. If your chargebacks are greater than or equal to the following thresholds, you will be entered into the applicable Visa program:

b) Early warning notifications

Visa provides Braintree with information on a monthly basis that will give you the opportunity to reduce chargeback levels before your account is identified in the program. You will receive notifications at:

75 or more chargebacks and .75% or more chargeback-to-sales count ratio

Also note that if you exceed thresholds for the standard chargeback program, you may skip early warning notifications altogether.

c) Enhanced program timelines

New timelines include the following notification and workout periods prior to your account entering enforcement:

*Your status can be pushed from Standard to High-Risk timeline at Visa’s discretion. This action is based on a review of your account’s performance or inappropriate business practices.

2. Visa Fraud Monitoring Program

There are three main facets to the new Visa Fraud Monitoring Program (VFMP):

a) New thresholds

The program reviews the previous month’s reported fraudulent transactions against that month’s sales transactions. If your account’s fraudulent transactions are greater than or equal to the following threshold, you will enter Visa’s Program:

$75,000 or more in reported fraud and 1% or more in fraud-to-sales amount ratio

b) Early warning notifications

Visa provides Braintree with information on a monthly basis that will give you the opportunity to reduce fraud levels before your account is identified in this program. You will receive notifications at:

$50,000 or more in reported fraud and 0.75% or more in fraud-to-sales amount ratio

c) Enhanced program timelines

New timelines include notification and workout periods prior to your account entering enforcement. Please note that chargeback identification/fees take precedence when dual chargeback/fraud IDs occur:

As always, Braintree Accounts team is happy to help with chargeback management and implementation of fraud tools. Have a question? Send us a note at accounts@getbraintree.com.

Resources
Merchant Chargeback and Fraud Monitoring Programs, Visa Business News, 13 Aug 2015

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Colleen White Colleen is on the Account Management team at Braintree. A Chicago-native by way of Madison, Wisconsin, she adores Springer Spaniels, a good glass of Sancerre, and her Seven-iron. More posts by this author >>

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