Card Scheme Monitoring Programs Explained

Card schemes expect their merchants to be in compliance with their rules and regulations as part of acknowledging their brand for use of payment. These rules are monitored by the Card schemes to maintain the business integrity and to ensure that merchants are conducting themselves professionally. 

Each Card scheme has their own monitoring program with the end-goal of maintaining a merchant's chargeback ratio within the threshold limit. Assembly uses the Card scheme monitoring programs to carefully observe and identify high-risk merchants to help mitigate chargebacks and improve on their sales process. 

Entering in any of the Card scheme monitoring programs have its implications which would result in higher chargeback fees and penalties, stricter monitoring and can ultimately lead to a merchant being disqualified in the Card scheme program. Basically, if you are entered into a Card scheme monitoring program, Chargebacks will cost you even more money, and it may result in you losing your ability to process card payments.

Assembly will reach out to Customers that are close to meet any of the Card scheme monitoring programs to help remediate the case. Below are the different Card scheme monitoring programs:

Visa

Visa Chargeback Monitoring Program (VCMP)

Visa monitors Merchants that have exceeded or are likely to exceed on the monthly disputes (Chargebacks) thresholds through Visa Chargeback Monitoring Program (VCMP). The monthly performance levels are evaluated by  monitoring all Chargeback reason codes except Reason code 93 - Visa Fraud Monitoring Program (for Chargebacks processed through 13 April 2018) and Dispute Condition 10.5 - Visa Fraud Monitoring Program (for Disputes processed on or after 14 April 2018).

Merchants are identified either on VCMP Standard or High-Risk depending on the thresholds they meet or exceed.

Level	Thresholds
Standard	100 dispute count AND 1%  *Dispute-to-sales ratio
High-Risk (any of the following thresholds will apply)	For Merchants that are not and should not be categorized by a high-brand risk MCC: 1000 dispute count AND 2% *Dispute-to-sales ratio  The Merchant exceeds the standard program thresholds and is categorized or should be categorized by a high-brand risk MCC Visa determines that the Merchant caused undue harm to the goodwill of the Visa payment system. The Merchant’s Acquirer is subject to risk reduction measures, Member Risk Reduction Requirements, for poor Merchant management practices.

*Dispute-to-sales ratio = Previous month dispute count / Previous month Sales count

VCMP runs a 12-month program timeline for Merchant's compliance as applicable. If any of the levels are met, the merchant will enter the program and has to work to keep their chargebacks within the acceptable level for 3 consecutive months to close the case. Failure to do so may lead to permanent disqualification to Visa Card brand program.

Level	Program Status	Actions Required
Standard	1st Month - Notification	Merchant is notified and is advised to address the Chargeback increase
	2nd - 4th Month - Workout Period	Merchant to submit an Acceptable Dispute remediation plan From month 2 onwards: Implement a Dispute remediation plan From month 3 onwards: Provide to Visa written updates to the Dispute remediation plan
	5th - 11th Month - Enforcement Period	Fees are applicable Adjust the Dispute remediation plan as required and provide updates to Visa Merchant will get notified that it may lose Visa acceptance privileges if it fails to reduce its Disputes below the program thresholds by month 12 From month 10 onwards: Review fees are applicable
	12th Month - Enforcement Period	Non-compliance assessments and fees are applicable Review fees are applicable Merchant is eligible for disqualification
High-Risk	1st Month - Enforcement Period	Non-compliance assessments and fees are applicable Merchant is notified and is advised to address the Chargeback increase
	2nd - 5th Month Enforcement Period	Non-compliance assessments and fees are applicable Implement a Dispute remediation plan Provide to Visa written updates to the Dispute remediation plan
	6th - 11th Month	Non-compliance assessments and fees are applicable Provide to Visa written updates to the Dispute remediation plan Merchant will get notified that excessive disputes may lead to disqualification From month 7 and onwards: Review fees are applicable
	12th Month	Non-compliance assessments and fees are applicable Review fees are applicable Merchant is eligible for disqualification

Visa Fraud Monitoring Program (VFMP)

Visa monitors Merchants that have exceeded or are likely to exceed on the monthly fraud thresholds through Visa Fraud Monitoring Program (VFMP).

Merchants are identified either on VFMP Standard or High-Risk depending on the thresholds they meet or exceed.

Level	Thresholds
Standard	$75,000 USD fraud amount AND 1% Fraud dollar-to-sales dollar ratio
High-Risk (any of the following thresholds will apply)	The Merchant is categorised, or should be categorised, by a high-brand risk MCC For Merchants that are not and should not be categorized by a high-brand risk MCC:$250,000 USD fraud amount AND 2% Fraud dollar-to-sales dollar ratio   Visa determines that the Merchant caused undue harm to the goodwill of the Visa payment system. The Merchant’s Acquirer is subject to risk reduction measures, Member Risk Reduction Requirements, for poor Merchant management practices.

*Dispute-to-sales ratio = Prior Month Dispute Fraud amount / Prior Month Sales amount

VFMP runs a 12-month program timeline for Merchant's compliance as applicable. If any of the levels are met, the merchant will enter the program and has to work to keep their fraud chargebacks within the acceptable level for 3 consecutive months to close the case. Failure to do so may lead to permanent disqualification to Visa Card brand program.

Level	Program Status	Actions Required
Standard	1st Month - Notification	Merchant is notified and is advised to address the cause of the excessive fraud
	2nd - 4th Month - Workout Period	Merchant to submit an Acceptable fraud remediation plan From month 2 onwards: Implement a fraud remediation plan From month 3 onwards: Provide to Visa written updates to the fraud remediation plan
	5th - 11th Month - Enforcement Period	Adjust the fraud remediation plan as required and provide updates to Visa (Effective for Chargebacks processed through 13 April 2018) Chargeback reason code 93: liability is applicable to the fraud Transactions associated with the current Merchant identification (Effective for Disputes processed on or after 14 April 2018) Dispute Condition 10.5: Visa Fraud Monitoring Program liability is applicable to the fraud Transactions associated with the current Merchant identification Month 8: Merchant will get notified that it may lose Visa acceptance privileges if it fails to reduce its Disputes below the program thresholds by month 12
	12th Month - Enforcement Period	Merchant is eligible for disqualification (Effective for Chargebacks processed through 13 April 2018) Chargeback  reason code 93: liability is applicable to the fraud Transactions associated with the current Merchant identification (EffectiveforDisputesprocessedonor after 14 April 2018) Dispute Condition 10.5: Visa Fraud Monitoring Program liability is applicable to the fraud Transactions associated with the current Merchant identification
High-Risk	1st Month - Enforcement Period	Non-compliance assessments are applicable (Effective for Chargebacks processed through 13 April 2018) Chargeback reason code 93: liability is applicable to the fraud Transactions associated with the current Merchant identification (Effective for Disputes processed on or after 14 April 2018) Dispute Condition 10.5: Visa Fraud Monitoring Program liability is applicable to the fraud Transactions associated with the current Merchant identification Merchant is notified and is advised to address the cause of the excessive fraud
	2nd - 5th Month Enforcement Period	Non-compliance assessments are applicable (Effective for Chargebacks processed through 13 April 2018) Chargeback reason code 93: liability is applicable to the fraud Transactions associated with the current Merchant identification (Effective for Disputes processed on or after 14 April 2018) Dispute Condition 10.5: Visa Fraud Monitoring Program liability is applicable to the fraud Transactions associated with the current Merchant identification Implement a fraud remediation plan Provide to Visa written updates to the fraud remediation plan
	6th - 11th Month	Non-compliance assessments and fees are applicable (Effective for Chargebacks processed through 13 April 2018) Chargeback reason code 93: liability is applicable to the fraud Transactions associated with the current Merchant identification (Effective for Disputes processed on or after 14 April 2018) Dispute Condition 10.5: Visa Fraud Monitoring Program liability is applicable to the fraud Transactions associated with the current Merchant identification Provide to Visa written updates to the fraud remediation plan Month 6: Merchant will get notified that excessive disputes may lead to disqualification
	12th Month	Non-compliance assessments are applicable (Effective for Chargebacks processed through 13 April 2018) Chargeback reason code 93: liability is applicable to the fraud Transactions associated with the current Merchant identification (Effective for Disputes processed on or after 14 April 2018) Dispute Condition 10.5: Visa Fraud Monitoring Program liability is applicable to the fraud Transactions associated with the current Merchant identification Merchant is eligible for disqualification

 

Mastercard

Excessive Chargeback Program (ECP)

Mastercard monitors Merchants that have exceeded or are likely to exceed on the monthly Chargebacks thresholds through Excessive Chargeback Program (ECP).

Merchants are identified either on ECP Chargeback Monitored Merchants (CMM) or ECP Excessive Chargeback Merchant (ECM) depending on the thresholds they meet or exceed.

Level	Thresholds
ECP-CMM	Minimum of 100 Chargebacks count AND greater than 100 bps (1%)  *Chargeback-to-transaction ratio (CTR)
ECP-ECM	Minimum of 100 Chargebacks count AND greater than 150 bps (1.5%)  *Chargeback-to-transaction ratio (CTR) for two (2) consecutive months

*CTR = Chargebacks count in 1 month / Sales transaction  the previous month

ECP runs a 12-month program timeline for Merchant's compliance as applicable. If any of the levels are met, the merchant will enter the program and has to work to keep their chargebacks within the acceptable level for 2 consecutive months to close the case.

Level	Program Status	Actions Required
ECP - CMM	Informational only	No assessment and fines.
ECP - ECM	Tier 1 1st - 6th month	Chargeback reduction plan Assessment fees are applicable
	Tier 2 7th - 12th month	Chargeback reduction plan Assessment fees are applicable Acquirer to potentially undergo Fraud Monitoring Program audit
	Tier 3 12+ months after	Chargeback reduction plan Assessment fees are applicable Non-compliance assessment fee of up to USD 50,000 per month

 

Global Merchant Audit Program (GMAP)

Mastercard monitors Merchants that have exceeded or are likely to exceed on the fraud thresholds in a rolling six months of data  through the Global Merchant Audit Program (GMAP).

Merchants are classified in 3 GMAP tiers depending on the level of thresholds they've met or exceeded.

Tier	Thresholds
1	3 Fraudulent transactions At least $3,000 USD in fraudulent transactions A *Fraud-to-sales dollar volume ratio minimum of 3% and not exceeding 4.99%
2	4 Fraudulent transactions At least $4,000 USD in fraudulent transactions A *Fraud-to-sales dollar volume ratio minimum of 5% and not exceeding 7.99%
3	5 Fraudulent Transactions At least $5,000 USD in fraudulent Transactions A *Fraud-to-sales dollar volume ratio minimum of 8%

*Fraud-to-sales dollar volume ratio = Previous month Fraud CB dollar volume / Previous month transaction dollar volume

If a Merchant is identified in multiple tiers during any rolling six-month period, GMAP will use the highest tier for the Merchant identification.

When a Merchant is identified in Tier 1, Tier 2, or Tier 3, fraud control measures should be evaluated. GMAP merchant identifications are provided for information only however, If GMAP identifies a Merchant in Tier 3, Mastercard will determine whether to initiate an audit of the Merchant (“a Tier 3 special Merchant audit”).

Level	Program Status	Actions Required
Tier 1	Informational only	Fraud control action plan
Tier 2	Informational only	Fraud control action plan
Tier 3	Informational with potential audit (Tier 3 special Merchant audit)	Actions for Tier 3 special Merchant audit Acquirer to decide either to: Notify Mastercard that Merchant is terminated Complete an online questionnaire from Mastercard to extenuate or provide exceptional circumstances and present fraud control measures for the Merchant. In repsonse, Mastercard may decide to do one of the following: Grant Merchant for an exclusion  Provide the Acquirer with the opportunity to implement additional fraud control measures as directed by Mastercard Fraud control action plan will be required within 90-day action period by Mastercard After the 90-day action period, Mastercard will determine if a Chargeback liability is applicable The Merchant has to work to keep their fraud chargebacks within the acceptable level for 6 months Merchant may get published in Mastercard's Global Security Bulletin Mastercard may extend the Chargeback liability program to 12 months.

Discover

Discover monitors Merchants that have exceeded or are likely to exceed on the monthly Chargebacks thresholds through their excessive Chargeback program.

Merchants are identified in the excessive chargeback program if they meet the below threshold.

100 Chargeback count AND 1% *Chargeback-to-transaction ratio

*Chargeback-to-transaction ratio = Previous month Chargeback count / Previous month Transaction count.

There will be no work out period or audits on Merchants that are identified to Discover's excessive Chargeback program however, there will be a $25 USD fine for each chargeback that goes over the threshold limit.