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Insights and Expertise

A small acquirer losing a large CNP
merchant will be disproportionately
impacted. Merchants working with
smaller acquirers will pay the price.
Think about a small acquirer who
exceeds the 30 or 50 bps threshold.

If a merchant exceeds the specified threshold, a $10 fine
will apply to each non-fraud dispute and TC 40 item. I
emphasize this point, as the fine does not just apply to
the offending transactions over the threshold. If the
Acquirer is above standard, it will incur a $5 fine for
each non-fraud dispute and TC 40 for all merchants
with a VAMP ratio of >= 30 (or 50) bps. The acquirer fee
jumps to $10 for excessive acquirers.

Once enforcement begins, first-time offenders within a
rolling 12-month period will have a three-month grace
period to remediate before fines commence.

Acquirers and their merchants should prepare for
the coming changes. Though Visa is implementing
an advisory period, fraud reporting significantly
lags chargebacks so the tail on fraudulently posted
transactions is elongated.

Acquirers and merchants need to understand and
calculate these ratios now so they are prepared for the
impacts and adjust accordingly. This is a new structure,
and new tools should be decked out as fraud and
disputes are correlated but different.

Merchants should enroll and utilize an alert service
to take advantage of the ability to transform a pre-
dispute to a return. Merchants should work with their
Acquirer to understand their Acquirer’s VAMP Ratio.
Implementing Compelling Evidence should also be
considered.

Note: This article updates preliminary information
provided in "Visa acquiring monitoring program,"
published in The Green Sheet's issue 25:01:01, www.
greensheet.com/emagazine.php?article_id=7754.

As founder of Humboldt Merchant Services, co-founder of Eureka
Payments, and a former executive for such payments innova-
tors as WePay, a division of JPMorgan Chase, Ken Musante has
experience in all aspects of successful ISO building. He currently
provides consulting services and expert witness testimony as
founder of Napa Payments and Consulting, www.napapayment-
sandconsulting.com. Contact him at kenm@napapaymentsand-
consulting.com, 707-601-7656 or www.linkedin.com/in/ken-
musante-us.

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