New Visa Rules Reality That You Need to Understand Now as a Merchant
Chargebacks are a headache for any merchant, but they hit hardest those who are just starting their online business — because a wave of fraudulent users brings several painful losses at once. The financial damage isn't just the refund itself (which is what most people think of first), but also the fees charged by the payment network for every single dispute.
Disputed transactions do the most damage to businesses with a low average order value. For e-commerce selling services at $10–15, they directly influence per-customer margins. A $15 transaction, a chargeback fee of $25–30 — and the loss already exceeds the original purchase amount. On top of that, the processing fees from the initial payment are non-refundable, and of course any customer acquisition costs are gone too. This turns the customer from merely unprofitable into actively loss-generating.
On top of all this, Visa and Mastercard have built an environment where the very fact of a chargeback damages the merchant's standing and reputation, pushing up their CB rate (the ratio of disputes to settled transactions) in the eyes of the acquirer. If fraud metrics deteriorate consistently, the consequence can be termination — the merchant losing the ability to accept card payments entirely. So, the risk here isn't just financial losses from the core business; it's losing access to card payments on that site altogether. Some merchants can absorb losses. Losing card acceptance? That's a different story.
2025 brought a major shift: Visa added a new layer of monitoring — VAMP program — which sparked mixed reactions at the time, with many not yet clear on what it would actually mean in practice. VAMP is now fully in effect, and based on our own experience and that of our clients, we decided to break it down properly.
What VAMP is and Why the Formula Matters
It is worth clarifying that this "new program" is not really new, but rather a change in approach to old monitoring metrics that have existed for a long time. Visa merged two old monitoring programs — VFMP, which tracked fraud, and VDMP, which tracked chargebacks — into one called the Visa Acquirer Monitoring Program. Officially this is a simplification, since one metric is counted instead of two, but in practice the new monitoring program immediately revealed its main drawback: some incidents can be counted twice and artificially inflate the ratio.
The VAMP ratio formula looks like the sum of TC40 and TC15, divided by TC05. Behind these codes are specific events in processing: TC40 is a fraud report, a special record that the issuer sends to Visa when a cardholder reports an unauthorized transaction. This happens even before a chargeback — the merchant often learns about the TC40 with a delay through the acquirer, or doesn't learn about it at all. TC15, on the other hand, is the disputes themselves, meaning chargebacks, all of them in a row, both fraud-related and not. TC05 is settled transactions, the denominator of the formula, meaning all incoming payments that went through for the merchant.
In essence, the formula is fairly simple, but its main complexity lies in the fact that if one transaction generates both a TC40 and later a TC15, it gets counted in VAMP twice. One customer complains to the bank, the bank sends a fraud report and files a chargeback — two events for one incident, the same payment from the same customer. Although this might seem like an accident or an error in the formula, it is in fact a deliberate decision that Visa has stated openly, backing it up with the argument that TC40 and TC15 reflect different events at different times and should be counted separately. Nevertheless, for a merchant with a high share of fraud-related chargebacks, the VAMP ratio ends up twice as high as one might expect by looking only at the number of chargebacks itself.
Visa also clarifies that the VAMP ratio allows for somewhat higher values than the previously used chargeback ratio, which merchants mostly relied on, and that this is supposed to offset the double counting. In simpler terms, one transaction really is counted twice, but the permissible thresholds provide a certain “margin,” and so this counting method does not undermine the relevance of the formula.
How to Deal with High VAMP Ratio
Despite this, representatives of various companies in the industry (ourselves included) have noticed that the new monitoring program, besides tightening control over merchants, is also pushing them toward using Visa's own tools, which openly claim to be able to relieve VAMP headache.
One such tool is Verifi RDR (Rapid Dispute Resolution), integrated into Visa's systems, which allows operations to take place at the card network level and resolve disputes with customers automatically. The principle behind it is that when a cardholder initiates a dispute through their bank, the issuer sends a request into Visa's system, and only after that does the request reach the acquirer and then the merchant. The chargeback lifecycle is fairly long, and Visa proposes addressing the problem at the root, without letting it escalate into a lengthy dispute process. If a merchant is connected to the RDR system, this is recorded, and their payments are subject to automatic refunds provided they meet preset rules. The system checks the transactions and automatically refunds them if they meet the criteria. A full chargeback is never created at all, meaning it does not enter TC15, and that part of the VAMP ratio is not affected. For each dispute that RDR reviews and resolves, a fee has to be paid, around $19, depending on how the connection is set up: directly or through intermediaries.
Also, there are services such as Ethoca Alerts from Mastercard, as well as Verifi CDRN — these are alerts that notify the merchant that a cardholder has just contacted their bank. The merchant has 24 to 72 hours to issue a preemptive refund, in which case no chargeback is filed. This approach requires manual processing or automation on the merchant's side, unlike RDR, which works fully automatically and at the level of the Visa network itself, rather than through the acquirer. With RDR, the merchant receives a notification about a case that has already been resolved, while alerts merely notify about the case, and the merchant decides how to handle it.
An important thing we want to clarify separately: both RDR and Ethoca remove only TC15 from VAMP — the chargebacks themselves and do not affect TC40 in any way. This means that with a high level of fraud, half of the VAMP ratio problem remains even with paid tools connected. To fully exclude TC40 from the calculation, there is a separate mechanism — Compelling Evidence 3.0, which allows proving that previous transactions with the same cardholder went through without issues (if there were any). But CE 3.0 only works if the merchant has a history with that customer — for new users this tool will not be of any use. At the same time, it is still a tool that allows reactively cleaning up the fraud ratio, as long as this is done within the same month, so that the statistics remain current.
Payment networks also offer tools to reduce the number of returns, such as Visa Order Insight and Mastercard Consumer Clarity, which aim to disclose as much available payment data as possible to all parties involved in the process (in particular, the issuing bank). Unlike alerts, where preventing a chargeback requires issuing a full refund, these services pass extended purchase data to the bank. Based on this data, the bank itself rejects an unfounded claim, and the merchant does not refund the funds, preserving its revenue. Starting in July, Visa plans to tighten its rules for returns as well, which makes this set of tools relevant for many merchants too.
In the end, the situation looks like a well-thought-out scheme: rules change, but a tool immediately appears to solve the problems that arise from the tightening. Opinions here are divided as some industry leaders believe this is a customer-oriented approach and an attempt to bring an order, while others see in it nothing else but business. In any case, merchants today face a choice: spend more on fraud control, or lose money on fees? And is it even possible to avoid additional costs altogether?
What Merchants Should Do to Control VAMP Ratio
Every business looks for ways to cut costs, but looking at current trends, there is practically no talk of savings for merchants. Merchants who want to keep their accounts with the payment systems and operate without issues will have to resort to stricter anti-fraud settings on their own product or to third-party tools (whether these are official alerts or AI-based fraud-anticipation systems is up to each merchant to decide). All of this brings additional expenses, but they will most often be lower than the accumulated fees charged by the payment networks for chargebacks and the accumulated risk.
To work with the Visa network, Verifi's products are sufficient — this company was acquired by Visa in 2019, and RDR is Verifi's main product. This particular nuance is what worried the audience the most, since under the original VAMP announcement, only disputes resolved through RDR were supposed to be excluded from the VAMP ratio calculation, while disputes resolved through Ethoca were not. Since Ethoca belongs to Mastercard, this created a situation where one tool gave an advantage that the other did not have. Even though the payment systems are separate, the industry reacted with criticism, and Visa had to reconsider this decision: now both RDR and Ethoca have equal standing with respect to TC15 — disputes resolved through either tool are excluded from the VAMP ratio in the same way. This creates two equal tools that are effective and practically the only ones of their kind able to influence the VAMP ratio so directly.
Nevertheless, based on client experience, we see that the overall picture remains the same: the TC40+TC15 double counting is present in the formula, and it is noticeable. Most acquirers have set their own thresholds, which feel considerably stricter than the official ones, and there is a set of paid tools that partially solve the problem. All of this puts merchants in a position where there is a choice, but it is not a very large one, and this is especially true for subscription-based products and mass-market products, where there are many small payments going to the EU and US markets.
The smaller the business, the more pain you feel from each chargeback, since its weight in the overall formula is much bigger. But even as volumes grow, this problem does not dissolve on its own, and merchant accounts become ever more valuable (after all, you are accumulating more and more funds there over a short period of time). How should you solve your particular problem? It is worth examining your current metrics — there may be room for “free” optimization and improving customer interactions, which will naturally reduce fraud rates, close off windows of opportunity for fraudsters, and, if your product is genuinely valuable and used by customers, it makes more sense to invest in it. For complex services and mass subscriptions, it is worth looking ahead and thinking about scaling your processing, possibly even developing your own monitoring tools. All of this can be discussed in a consultation with our expert, where your case will be reviewed individually.
