Thresholds
Thresholds
Thresholds refer to the predefined levels of chargeback activity that trigger alerts, allowing merchants to take action to prevent chargebacks before they become a significant issue

Card schemes (such as Visa and Mastercard) monitor your disputes monthly and compare them to your sales. If the number of disputes (also known as chargebacks) you receive exceeds what the card scheme deem acceptable, you may be placed into their monitoring program.

Once you join a program, the system may charge you monthly fines and additional fees until you decrease the number of disputes to acceptable levels.

Visa

Visa has established two monitoring programs to identify merchants with excessive disputes and/or fraud to promote the use of fraud controls and fair business practices.
Both the Visa Dispute Monitoring Program (VDMP) and the Visa Fraud Monitoring Program (VFMP) run on a monthly cycle within a 12-month timeframe. At the beginning of each month, Visa reviews the previous month’s processing activity and identifies merchants that exceed the program thresholds. Your company must exceed both thresholds to be included in a program.

Visa calculates the ratio of disputes to sales as follows: the number of disputes you received during the month divided by the number of sales you processed during the same month multiplied by one hundred.
For example, if you had 175 disputes in January and made 5,500 sales in January, your dispute-to-sales ratio would be 3.18% (175 / 5500 x 100).
This would place you in the standard level of the VDMP (if you are in a non-high-risk merchant category).
Visa will remove you from the program if your dispute activity falls below the Standard thresholds for three consecutive months.

If your company is accepted into a program, you will be required to submit a recovery plan on a monthly basis starting from the second month. This plan will identify the root cause and describe actions to restore compliance. The plan should include milestones and dates for all remediation actions. Non-compliance fines will be calculated monthly based on the schedule and the month of program participation. To opt out of the program, your company must remain below the standard thresholds for three consecutive months. If your company remains in the program for more than 12 months, you may be disqualified from accepting Visa payments.

VDMP

  • 75 or more disputes, and 0.65% ratio of disputes to sales transactions
  • 100 disputes, and 0.9% ratio of disputes to sales transactions
  • 1000 disputes, and 1.8% ratio of disputes to sales transactions
  • 100 disputes, and 0.9% ratio of chargeback to sales transactions and
  • One of the following:
    • Merchant outlet moved from Visa standard threshold to High-Risk threshold based on a review of merchant performance and inappropriate business practices (e.g., use of abusive free trial policies, negative renewal options, etc.), or
    • The Merchant exceeds the standard program thresholds and is categorized or should be categorized by a high-brand risk MCC, as specified in Section 10.4.6.1, High-Brand Risk MCCs (MCC 5962, 5966, 5967, 7995, 5912, 5122, 5993), or
    • Met or exceeded the program’s Excessive threshold

VFMP

  • US $50,000 or more in fraud dollar amount, and 0.65% or higher ratio of fraud to sales dollar amount
  • US $75,000 in fraud amount, and 0.9% ratio of fraud to sales dollar amount
  • US $250,000 in fraud amount, and 1.8% ratio of fraud to sales dollar amount
  • US $75,000 in fraud dollar amount, and 0.9% ratio of fraud to sales dollar amount, and
  • One of the following:
    • Merchant outlet moved from Visa standard threshold to High Risk threshold based on a review of merchant performance and inappropriate business practices (e.g., use of abusive free trial policies, negative renewal options, etc.), or
    • The Merchant exceeds the standard program thresholds and is categorized or should be categorized by a high-brand risk MCC, as specified in Section 10.4.6.1, High-Brand Risk MCCs (MCC 5962, 5966, 5967, 7995, 5912, 5122, 5993), or
    • Met or exceeded the program Excessive threshold

Mastercard

Mastercard’s Acquirer Chargeback Monitoring Program (ACMP) has two levels: Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM). The total number of chargebacks you have in a month and your ratio of chargebacks to sales in that month will determine which tier you are placed in. We will notify you if you are accepted into the program.

Mastercard measures your chargeback rate in "basis points" and uses the number to determine which tier of the program you fall into.
These basis points are calculated as follows: the number of chargebacks in that month is divided by the number of Mastercard transactions you processed in the previous month and multiplied by 10,000.
For example, if you had 185 chargebacks in February and processed 7,500 payments in January, you would have a chargeback rate of 247 basis points (185 / 7500 x 10,000 = 246.66, rounded up to 247). This would place you in the Excessive Chargeback Merchant (ECM) tier of the program.
Mastercard will remove you from the program if your dispute activity falls below the ECM thresholds for three consecutive months.

The ECM program aims to simplify enforcement and enable faster communication between acquirers and the card network. The goal is to make merchant compliance a more accurate process with greater accountability. The ECM program is a chargeback compliance program created by Mastercard. The purpose of the program is to monitor the activities of eCommerce merchants and prevent excessive chargebacks on the Mastercard network. This is achieved by imposing penalties on merchants for non-compliance.
The EFM program aims to simplify enforcement and enables faster communication between acquirers and the card network. The goal is to make merchant compliance a more accurate process with greater accountability.

ECM

  • A count of at least 100 to 299 chargebacks, and
  • A chargeback to transaction ratio (CTR) = 1.5% to 2.99%
  • A count of at least 300 chargebacks, and
  • A chargeback to transaction ratio (CTR) = > 3%

EFM

  • 1,000 or more eCommerce transactions and
  • The total dollar amount (or local currency equivalent) of fraud related chargebacks in a given month equals or exceeds USD 50,000, and
  • The total number of fraud chargeback basis points is equal or more than 50, and
  • The percentage of monthly clearing volume processed using 3DS (including Data Only transactions) or Digital Secure Remote Payment (DSRP) is less than 10 percent in nonregulated countries or less than 50 percent in regulated countries.