Page 30 - gs260602

Insights and Expertise

Mastercard's Scam Visa and Mastercard are both increasing pressure on
Networks sharpen focus on scam activity
Merchant Monitoring acquirers to identify scam-related merchant activity

earlier, but their newest monitoring programs emphasize
Program (SMMP) somewhat different risks.

Visa's Visa Acquirer Monitoring Program (VAMP)
By Ken Musante consolidates fraud and dispute monitoring into a
broader framework focused on identifying problematic
Napa Payments and Consulting merchant behavior before excessive fraud or chargebacks
accumulate.
egardless of advances in system security,
scams that exploit human vulnerability will Mastercard's new Scam Merchant Monitoring Program
persist. AI is accelerating both the scale and (SMMP), scheduled to take effect in July 2026, focuses more
R sophistication of these schemes, enabling more specifically on scams involving consumer manipulation—
convincing deception and increasing pressure on detec- transactions technically authorized by cardholders but
tion systems. At the same time, consumer complaints are induced through deception.
rising and regulators are taking a more aggressive stance.
Increasingly, enforcement actions are not limited to the
bad actors themselves, but extend to the payment eco- ioral metrics. While these data points are not new, the
system: processors, payfacs and service providers, where required response is. When a merchant is flagged under
there is evidence that warning signs were ignored or con- SMMP criteria, the acquirer must initiate an investigation
trols were insufficient. within 72 hours. If scam activity is confirmed, the acquirer
is required to take action, including potentially blocking
For example, in 2025, Paddle.com agreed to a $5 million the merchant from processing Mastercard transactions.
settlement with the Federal Trade Commission over alle- Acquirers must monitor and intervene early
gations that it facilitated deceptive tech-support schemes
targeting U.S. consumers. Additional scrutiny applies to newly onboarded mer-
chants with limited processing history, and acquirers are
In a separate matter, Block agreed to pay a $40 million civ- expected to incorporate network-provided intelligence,
il penalty to the New York State Department of Financial including issuer-reported fraud data and chargeback in-
Services related to deficiencies in its anti-money launder- dicators tied to scam activity. As with Visa's VAMP frame-
ing and compliance controls tied to its Cash App platform. work, Mastercard is reinforcing the expectation that ac-
While they each have distinct fact patterns, both cases un- quirers actively monitor and intervene, rather than relying
derscore heightened expectations around fraud preven- solely on downstream indicators of fraud. These changes
tion and oversight. present operational challenges. Manual monitoring alone

Card networks also raise expectations is unlikely to be sufficient given the volume, speed and
complexity of emerging scam typologies.
The card networks are responding in parallel. Visa recent-
ly consolidated its fraud and dispute monitoring programs Acquirers will need to leverage automated and AI-driven
into the Visa Acquirer Monitoring Program (VAMP), en- tools to augment human review and more effectively uti-
hancing its ability to identify problematic merchant activ- lize internal expertise.
ity earlier in the lifecycle. The shift reflects Visa's position
that acquirers should proactively identify high-risk mer- The direction is clear: both regulators and card networks
chants rather than react after significant fraud or charge- are placing greater responsibility on the payment ecosys-
back activity has occurred. tem to identify and disrupt scam activity earlier. Acquir-
ers must manage third parties accordingly. In many cases,
Mastercard is taking a similar approach with the introduc- this means protecting consumers even when transactions
tion of its Scam Merchant Monitoring Program (SMMP), are technically authorized but induced through decep-
effective July 2026. tion.
As founder of Humboldt Merchant Services, co-founder of Eureka
SMMP is specifically designed to address scams involving Payments, and a former executive for such payments innovators as
consumer manipulation, where cardholders are induced WePay, a division of JPMorgan Chase, Ken Musante has experience in
to authorize transactions under false pretenses. This rep- all aspects of successful ISO building. He currently provides consulting
resents a meaningful shift from traditional fraud models services and expert witness testimony as founder of Napa Payments
that focus primarily on unauthorized transactions. Under and Consulting, www.napapaymentsandconsulting.com. Contact him
SMMP, acquirers are required to monitor merchant activ- at kenm@napapaymentsandconsulting.com, 707-601-7656 or www.
ity across a defined set of risk indicators, including trans-
action volumes, fraud rates, chargebacks and other behav- linkedin.com/in/ken-musante-us.
30