E-Commerce

Visa and MasterCard roll out changes to Fraud and Chargeback Programs

By February 23, 2020 No Comments

What’s changing from MasterCard ?

The Excessive Chargeback Program (ECP) has been updated. The ECP monitors merchant IDs (MIDs) that experience an excessive number of chargebacks per month. The updated version of the program comprises two categories: Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM).

A merchant will be considered an Excessive Chargeback Merchant (ECM) when both of the following are true:

  • The total number of chargebacks is greater than 100
  • The total number of chargeback basis points is greater than 150

A merchant will be considered a High Excessive Chargeback Merchant (HECM) when both of the following are true:

  • The total number of chargebacks is greater than 300
  • The total number of chargeback basis points is greater than 300

What does the change mean?

Once a merchant ID is identified as non-compliant, the merchant ID will continue to be monitored until there are three consecutive months below the thresholds, at which time the ECM status resets.

Monthly chargebacks are defined as all chargebacks with a processed date within the violation month. Basis points are the number of chargebacks for a merchant ID in a calendar month, divided by the number of Mastercard transactions processed for the merchant ID in the preceding month, and then multiplied by 10,000.

How will this affect you?

Financial assessments received by acquirers/processors as part of the ECP will ultimately be passed on to merchants.

Number of months above thresholdAssessment if at ECM levelAssessment if at HECM level
100
2USD 1,000USD 1,000
3USD 1,000USD 2,000
4 to 6USD 5,000USD 10,000 + USD 5 per chargeback for each one over 300
7 to 11USD 25,000USD 50,000 + USD 5 per chargeback for each one over 300
12 to 18USD 50,000USD 100,000 + USD 5 per chargeback for each one over 300
19+USD 10,000USD 200,000 + USD 5 per chargeback for each one over 300

Effective date

  • April 1, 2020 for all regions except Canada
  • September 1, 2020 for Canada

Visa’s fraud and chargeback updates apply globally

In October 2019, Visa started applying new thresholds to its Visa Fraud Monitoring Program (VFMP) and Visa Dispute Monitoring Program (VDMP, formerly known as the Visa Chargeback Monitoring Program). Visa’s goal is to improve the efficiency of these programs to reduce fraud and disputes while protecting the integrity of the Visa payment system.

Please keep in mind that in order to be identified in the VFMP and/or the VDMP, both the fraud dollar/dispute count and rate thresholds need to be met .

Leave a Reply