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Compliance Metrics & Monitoring

TL;DR

Effective compliance monitoring requires tracking three primary metrics: chargeback ratio (disputes/transactions), fraud ratio (fraud amount/sales), and enumeration ratio (card testing attacks). Most programs historically require staying below ~1% for chargebacks and ~0.5-1% for fraud. Build dashboards that show 30/60/90-day trends and set alerts at 50% of threshold levels to catch problems early.

Core Compliance Metrics​

Chargeback Ratio​

The chargeback ratio measures disputes relative to transaction volume. This is the primary metric for network monitoring programs.

Formula:

Chargeback Ratio = (Chargebacks in Month N) / (Transactions in Month N or N-1) × 100

Target: Below 0.9% for most programs; below 0.5% for conservative risk appetite

Calculation Differences:

  • Visa: Uses same-month transactions as denominator
  • Mastercard: Uses prior month (N-1) transactions as denominator
VAMP Changes

Visa's VAMP program combines fraud TC40s and non-fraud TC15s in a single ratio. See Dispute Monitoring for details.

Fraud Ratio​

The fraud ratio measures confirmed fraud relative to sales volume.

Formula:

Fraud Ratio = (Fraud Amount in Month) / (Sales Amount in Month) × 100

Target: Below 0.5% for most programs

Measurement Methods:

  • Via TC40 reports (Visa) filed by issuers
  • Via fraud-reason chargebacks (Mastercard)
  • Via internal fraud detection systems

Enumeration Ratio​

The enumeration ratio measures card testing and BIN attack activity.

Formula:

Enumeration Ratio = (Confirmed Enumerated Transactions) / (Total Settled Transactions) × 100

Threshold: 20% triggers VAMP enrollment

Minimum Volume: Applies when 300,000+ enumerated transactions detected

VAMP Ratio (Visa 2025+)​

Visa's consolidated monitoring metric combining fraud and disputes.

Formula:

VAMP Ratio = (TC40 Fraud Count + Non-Fraud Disputes TC15) / (Settled CNP Transactions)
Double Counting

Under VAMP, fraud disputes effectively count twice: once when the issuer files a TC40 fraud notification, and again if a TC15 chargeback is also filed.

Thresholds: Tightening through 2025-2026 (see Dispute Monitoring)

Monitoring Dashboard Components​

What to Track​

Daily/Weekly Views:

  • Chargeback counts by day
  • Fraud amounts by day
  • Authorization decline rates
  • Alert volumes (Ethoca, Verifi)

Monthly Views:

  • Chargeback ratio vs. threshold
  • Fraud ratio vs. threshold
  • VAMP ratio calculation
  • Trend comparison (current vs. prior 3 months)

Breakdown Dimensions:

  • By reason code (identify root causes)
  • By merchant (for acquirers)
  • By BIN (for issuers)
  • By product type (credit vs. debit)
  • By channel (CNP vs. CP)

Alert Thresholds​

Set internal alerts before you hit network thresholds:

LevelTriggerAction
GreenBelow 50% of thresholdNormal monitoring
Yellow50-75% of thresholdIncreased scrutiny, root cause analysis
Orange75-90% of thresholdRemediation planning, daily monitoring
Red90%+ of thresholdEmergency response, network notification

Key Thresholds Reference​

Verify Current Thresholds

Thresholds below are as of 2025-2026 network bulletins. Confirm current values with your acquirer, as these change periodically.

ProgramMetricStandard ThresholdExcessive Threshold
Visa VAMP (Merchants)VAMP RatioN/A~1.5% → ~0.9% (tightening through 2026)
Visa VAMP (Acquirers)VAMP Ratio~0.3%~0.5%
Mastercard ECMCB Count + RatioN/A100+ AND 1.5%+
Mastercard HECMCB Count + RatioN/A300+ AND 3.0%+
Mastercard EFM (2025)Fraud Amount + RatioN/A$50K+ AND 0.5%+

Early Warning Systems​

Proactive Monitoring​

Set internal thresholds at 50% of network limits:

  • Visa VAMP ~0.75% internal alert
  • Mastercard ECM ~0.75% + 50 chargebacks internal alert

Monitor velocity, not just absolute numbers:

  • Week-over-week change percentage
  • Month-over-month trajectory
  • Seasonal adjustment factors

Flag anomalies:

  • MIDs/BINs with sudden increases
  • New merchants with unusual patterns
  • Specific reason codes spiking

Review Cadence​

SituationReview Frequency
Normal operationsWeekly compliance review
Approaching 50% thresholdTwice-weekly review
Approaching 75% thresholdDaily review
Above 90% thresholdMultiple daily reviews

Issuer-Specific Metrics​

Dispute Initiation Rate​

Measures how often your cardholders dispute transactions.

Dispute Initiation Rate = (Disputes Initiated) / (Total Transactions) × 100

Higher rates may indicate:

  • Fraud targeting your cards
  • Poor merchant partnerships
  • Cardholder education needs

Fraud Loss Rate by BIN​

Track fraud losses segmented by BIN to identify problem products.

Fraud Loss Rate = (Fraud Losses) / (Sales Volume) × 100

TC40 Filing Compliance​

Issuers must file TC40s for all fraud claims. Track:

  • Filing timeliness
  • Filing completeness
  • Filing accuracy

Visa Issuer Monitoring Program (VIMP)​

  • Monitors issuer-side fraud and dispute rates for CNP
  • Includes dispute-to-transaction and fraud-to-sales ratios
  • Regional minimum volume thresholds apply

Acquirer/Merchant Metrics​

Portfolio-Level Monitoring​

For acquirers managing multiple merchants:

MetricCalculationTarget
Portfolio VAMP ratioAggregate across all MIDsBelow 0.3% (above standard)
At-risk merchant countMIDs above 75% thresholdZero
MATCH additionsNew listings per quarterMinimize

Individual Merchant Tracking​

MetricFrequencyAction Trigger
Chargeback ratioDailyAbove 0.5%
Fraud ratioWeeklyAbove 0.25%
VAMP ratioDailyAbove 0.75%

BRAM/VIRP Status​

Track registration and compliance status for high-risk merchants:

  • Registration current?
  • Monitoring reports filed?
  • Any violations flagged?

Reporting Cadence​

FrequencyReport TypeAudienceContent
DailyAlert/exception reportOperationsThreshold breaches, anomalies
WeeklyTrend summaryRisk managersRatio trends, reason code analysis
MonthlyFull compliance reportLeadership, regulatorsAll metrics, program status
QuarterlyProgram reviewBoard, examinersStrategic view, remediation status

Monthly Report Components​

  1. Executive Summary

    • Overall compliance status (Green/Yellow/Red)
    • Key metric trends
    • Notable events

  2. Metric Detail

    • Chargeback ratio with trend
    • Fraud ratio with trend
    • VAMP ratio calculation
    • Breakdown by segment

  3. Program Status

    • Current network program enrollments
    • Remediation plan progress
    • Upcoming threshold changes

  4. Action Items

    • Required responses
    • Recommended improvements
    • Timeline commitments

Building Your Dashboard​

Essential Views​

Real-Time (refreshed hourly):

  • Current day chargeback count
  • Current day fraud alerts
  • Authorization decline rate

Daily Summary:

  • Rolling 30-day chargeback ratio
  • Rolling 30-day fraud ratio
  • Comparison to same period prior month

Trend Analysis:

  • 90-day trend chart
  • Projection to month-end
  • Threshold overlay

Data Sources​

Data TypeSourceFrequency
ChargebacksProcessor reports, network filesDaily
TransactionsAuthorization logsReal-time
TC40sVisa reportingDaily
Fraud claimsInternal systemsReal-time
Alert resolutionsEthoca, VerifiDaily

Next Steps​

Setting up compliance monitoring?

  1. Track core metrics - Chargeback, fraud, enumeration ratios
  2. Build your dashboard - Real-time, daily, trend views
  3. Set alert thresholds - 50/75/90% of network limits

Approaching thresholds?

  1. Check key thresholds - VAMP, ECM, EFM limits
  2. Increase review cadence - Daily at 75%, multiple daily at 90%
  3. Follow remediation playbook - Emergency response

Building early warning systems?

  1. Set internal alerts at 50% - Catch problems early
  2. Monitor velocity not just absolutes - WoW and MoM changes
  3. Establish reporting cadence - Weekly, monthly, quarterly

See Also​