Visa recently announced a grace period until October 1, 2025 before the new Visa Acquirer Monitoring Program (VAMP) guidelines will be enforced with fines or penalties. This extension provides merchants, merchant acquirers, and Independent Sales Organizations (ISOs) additional time to adapt to the revised requirements. It's important for merchants to know what VAMP is, the updated program guidelines, and their potential impact on stakeholders.
What is the Visa Acquirer Monitoring Program (VAMP)?
VAMP is Visa’s initiative to ensure compliance and mitigate risk in merchant processing. It primarily monitors excessive fraud and chargeback activity among merchants, aiming to maintain transaction integrity and prevent abuse of the Visa payments ecosystem. The program sets thresholds for acquirers and their merchants, ensuring that merchants exhibiting high-risk transaction behaviors are subject to scrutiny and corrective oversight.
Merchant Thresholds for VAMP Applicability
Visa enforces VAMP rules based on specific merchant activity thresholds. Merchants become subject to VAMP when they exceed predefined program criteria, which typically include:
- Fraud and Chargeback Ratios: Merchants exceeding Visa’s chargeback-to-sales volume ratio of 0.9% or a fraud-to-sales volume ratio of 0.9% are flagged for monitoring.
- Transaction Volume: Merchants processing over $50,000 in fraud-related transactions per month or experiencing more than 100 chargebacks in a single month may trigger VAMP oversight.
- High-Risk Business Models: Merchants operating in industries prone to fraudulent activities or chargeback disputes may be required to be enrolled in the program.
Key Changes in the New VAMP Guidelines
The revised VAMP guidelines introduce several notable updates:
- Stricter Fraud and Chargeback Thresholds: The new guidelines lower the allowable fraud and chargeback ratios before a merchant is flagged. Previously, merchants were only flagged if their chargeback-to-sales ratio or fraud-to-sales ratio exceeded 1.0%, but the new guidelines lower this to 0.9% for chargebacks and fraud, respectively.
- Enhanced Monitoring Requirements: Acquirers must implement more rigorous monitoring tools and reporting mechanisms for merchants exceeding thresholds.
- Stronger Enforcement Mechanisms: Once the grace period ends, non-compliant merchants and acquirers may face financial penalties including potential loss of Visa processing privileges.
- Increased Acquirer Accountability: Acquirers are expected to take a more proactive role in managing merchant compliance to avoid potential liability.
New VAMP Impact Assessment
- Greater Compliance Pressure: Merchants must closely monitor fraud and chargeback levels to avoid enforcement actions.
- Operational Adjustments: Businesses should consider meaningful implementation of fraud prevention measures such as enhanced/multi-factor customer verification and improved refund policies.
- Potential Processing Restrictions: Failure to comply could lead to penalties or processing limitations, increasing operational costs and business viability concerns.
- Stronger Due Diligence Required: Acquirers will need to monitor merchant portfolios more effectively, deploying advanced analytics to detect risk trends early. This introduces a greater need for intelligent risk and fraud tools at every stage of the transaction lifecycle.
- Liability for Merchant Breaches: Increased accountability means acquirers must be diligent in enforcing Visa’s rules to avoid penalties of their own.
- Expanded Compliance Costs: Fraud never sleeps, so acquirers should continually invest in fraud prevention and compliance tools to meet the new standards.
- Stricter Merchant Onboarding: As the tip of the spear, ISOs must bear some of the diligence burden. They should exercise greater caution when signing new merchants to ensure compliance with Visa’s updated fraud thresholds.
- Risk of Business Model Adjustments: Higher scrutiny could force ISOs to reevaluate partnerships with high-risk merchants to mitigate liability.
- Increased Collaboration with Acquirers: ISOs will likely need to align and collaborate more closely with acquiring banks to meet new monitoring and enforcement expectations.
How Mastercard Transactions Relate to Visa’s VAMP Requirements
Merchants should consider how their Mastercard transactions align with Visa’s VAMP compliance expectations. While Visa and Mastercard operate separate fraud and chargeback monitoring programs, their thresholds and enforcement mechanisms often share similarities. Mastercard’s Excessive Chargeback Program (ECP) and Fraud Monitoring Program (FMP) impose strict thresholds, similar to Visa’s 0.9% fraud and chargeback ratios.
To remain compliant across both networks, merchants should:
- Monitor Chargeback and Fraud Metrics Holistically: Ensuring that fraud and chargeback ratios stay below the limits set by both Visa and Mastercard will help avoid penalties and account restrictions.
- Implement Unified Fraud Prevention Strategies: Leveraging consistent fraud detection tools and chargeback mitigation strategies across both card networks can reduce compliance risks.
- Work with Acquirers for Cross-Network Compliance: Acquirers can provide guidance on managing risk in a way that satisfies both Visa’s and Mastercard’s monitoring programs, ensuring uninterrupted transaction processing.
By proactively managing fraud and chargeback levels with both Visa and Mastercard in mind, merchants can ensure smoother payment processing and avoid regulatory scrutiny from multiple card networks.
Preparing for Compliance Before the Grace Period Ends
For many, the preparation for the new VAMP guidelines is already underway. With the October 1, 2025, grace period announced, stakeholders have some extra time to adjust current practices to align with the new VAMP requirements. For many this will surely include implementing fraud mitigation technologies, refining chargeback prevention strategies, and strengthening compliance frameworks. By doing so, merchants, acquirers, and ISOs can minimize the risk of penalties and ensure seamless Visa processing under the revised program.
