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Network Monitoring Programs

TL;DR
  • Visa VDMP: 0.9% AND 100+ disputes = $25K+/month fees; 1.8% AND 1000+ = $50K+
  • Mastercard ECP: 1.5% AND 100+ (ECM) = $1K-$25K; 3.0% AND 300+ (HECM) = $25K-$100K
  • Exit requires: 3 consecutive months below thresholds + remediation plan
  • Warning levels: Watch at 0.65% (Visa early warning), act at 0.75%+
  • Termination risk: 12+ months in program without improvement

Exceeding network thresholds triggers monitoring programs with escalating fees and potential termination.

Program Overview​

NetworkDispute ProgramFraud Program
VisaVDMPVFMP
MastercardECPQMAP/BRAM
AmexICPGMR
DiscoverDCP-

Visa Programs​

VDMP (Visa Dispute Monitoring Program)​

LevelDispute RatioDispute CountMonthly Assessment
Early Warning≥0.65%AND ≥75None (warning only)
Standard≥0.9%AND ≥100$25,000+
Excessive≥1.8%AND ≥1,000$50,000+

Calculation:

Dispute Ratio = Disputes (current month) ÷ Sales Transactions (current month) × 100

Both thresholds must be met to enter program.

VDMP Timeline​

MonthStandard LevelExcessive Level
1-4Warning$25,000/month
5-9$25,000/month$50,000/month
10-12$50,000/month$75,000/month
12+Termination riskTermination likely

Exit Requirements​

  • Below both thresholds for 3 consecutive months
  • Remediation plan submitted and approved
  • No repeat violations within 12 months

VFMP (Visa Fraud Monitoring Program)​

LevelFraud RatioFraud CountUSD Volume
Early Warning≥0.50%AND ≥500AND ≥$50,000
Standard≥0.75%AND ≥500AND ≥$75,000
Excessive≥1.00%AND ≥1,000AND ≥$250,000
All Three Conditions

All three conditions must be met simultaneously to enter VFMP.

Calculation:

Fraud Ratio = Fraud Chargebacks (TC 40) ÷ Sales Transactions × 100

VFMP Fees​

MonthStandardExcessive
1-4Warning$25,000
5-9$25,000$50,000
10+$50,000+$75,000+

V.I.T.A.L. (Visa Integrity Risk Analysis Tool)​

High-brand-risk merchant monitoring for:

  • Adult content
  • Gambling/gaming
  • Pharmaceuticals
  • Tobacco/cannabis
  • Cryptocurrency
  • Nutraceuticals
  • Travel (high-risk segments)

Consequences:

  • Enhanced monitoring
  • Required compliance certifications
  • Potential restrictions on processing

Mastercard Programs​

ECP (Excessive Chargeback Program)​

LevelChargeback RatioChargeback CountMonthly Assessment
Excessive Chargeback Merchant (ECM)≥1.5% (150 bps)AND ≥100$1,000-$25,000
High Excessive Chargeback Merchant (HECM)≥3.0% (300 bps)AND ≥300$25,000-$100,000

Calculation:

Chargeback Ratio = Chargebacks ÷ Sales Transactions × 100

ECP Timeline​

Month in ProgramECM FeesHECM Fees
1-3Warning$1,000
4-6$1,000$2,000
7-11$5,000$25,000
12-18$25,000$50,000
19+$100,000Termination

Exit Requirements​

  • Below thresholds for 3 consecutive months
  • Evidence of corrective action
  • Compliance certification submitted

QMAP (Questionable Merchant Audit Program)​

Merchants listed in QMAP announcements face:

  • Automatic chargeback rights for issuers on certain codes
  • Enhanced monitoring by Mastercard
  • Required remediation plans
  • Potential termination

Listing criteria:

  • High fraud rates
  • Excessive chargebacks
  • Compliance violations
  • Brand risk concerns

BRAM (Business Risk Assessment and Mitigation)​

High-risk merchant categories requiring:

  • Enhanced due diligence at onboarding
  • Ongoing monitoring requirements
  • Additional compliance certifications
  • Higher reserve requirements

BRAM Categories:

  • Adult content
  • Gambling
  • Cryptocurrency
  • Pharmacy/healthcare
  • Tobacco
  • Firearms

American Express Programs​

ICP (Immediate Chargeback Program)​

Merchants with excessive chargebacks face:

  • Automatic chargeback liability on disputed transactions
  • Waived representment rights for some codes
  • Enhanced monitoring
  • Potential termination

Threshold: Case-by-case basis (no published thresholds)

GMR (Global Merchant Review)​

  • Brand protection monitoring
  • Compliance review process
  • Content and practice audits
  • Potential card acceptance termination

Discover Programs​

DCP (Discover Chargeback Program)​

LevelThresholdConsequence
WarningApproaching limitsMonitoring
ProgramExceeds limitsFees + restrictions
TerminationSevere/repeatedProcessing terminated

Calculating Your Rates​

Chargeback Ratio​

Chargeback Ratio = (Chargebacks in Month) ÷ (Transactions in Month) × 100

Example:
150 chargebacks ÷ 10,000 transactions = 1.5% ratio

Fraud Ratio​

Fraud Ratio = (Fraud Chargebacks) ÷ (Transactions) × 100

Example:
75 fraud CBs ÷ 10,000 transactions = 0.75% ratio

Important Notes​

  • Transaction counts matter - Low-volume merchants can hit ratio thresholds quickly
  • Both metrics - Many programs require both ratio AND count thresholds
  • Month matters - Some networks use current month, others use prior month

Warning Signs​

Leading Indicators​

Monitor these to catch problems early:

IndicatorWarning LevelAction Level
Chargeback ratio0.65%0.8%
Fraud ratio0.5%0.7%
Dispute trend+20% MoM+50% MoM
Customer complaintsIncreasingSpiking

Red Flags​

  • Chargeback ratio approaching 0.75%
  • Fraud ratio approaching 0.65%
  • Month-over-month increases
  • New fraud patterns emerging
  • Customer service complaints spiking

Remediation Requirements​

What Networks Want to See​

  1. Root cause analysis - Why are chargebacks occurring?
  2. Remediation plan - Specific actions with timelines
  3. Progress reporting - Regular updates
  4. Evidence of improvement - Declining metrics
  5. Compliance commitment - Ongoing monitoring

Typical Remediation Actions​

AreaActions
Fraud Prevention3DS implementation, enhanced scoring, velocity rules
Customer ExperienceClear descriptors, easy cancellation, better support
OperationsFaster refunds, delivery confirmation, dispute response
PoliciesClear terms, visible disclosures, proper consent

Prevention Strategies​

Immediate Actions​

  1. Enable fraud tools - 3DS, AVS, CVV
  2. Review refund policies - Make refunds easier
  3. Improve response time - Customer service SLAs
  4. Implement alerts - Ethoca, Verifi for pre-disputes

Long-term Solutions​

  1. Improve descriptors - Clear merchant names
  2. Order confirmations - Email with charge preview
  3. Delivery confirmation - Tracking and signature
  4. Review sales practices - No aggressive tactics
  5. Train customer service - Dispute prevention focus

Alert Services​

ServiceFunction
Verifi CDRNPre-dispute alerts for Visa
EthocaPre-dispute alerts for Mastercard
RDR (Rapid Dispute Resolution)Auto-resolve disputes

Program Comparison​

FactorVisa VDMPMastercard ECP
Standard threshold0.9%1.0%
Excessive threshold1.8%1.5%
Count threshold100/1,000100/300
Exit requirement3 months3 months
Max fees$50,000+/month$100,000/month

Next Steps​

Checking your program status?

  1. Calculate your ratio - Chargebacks ÷ transactions
  2. Check program thresholds - Where you stand
  3. Watch warning signs - Act before breach

Already in a program?

  1. Understand your timeline - Fees by month
  2. Follow remediation requirements - What networks want
  3. Implement prevention strategies - Get below thresholds

Preventing program entry?

  1. Monitor leading indicators - Early warning metrics
  2. Enable alert services - Ethoca, Verifi
  3. Review prevention strategies - Reduce disputes proactively

See Also​