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0.9 is the new 1: Visa chargeback ratios are changing in 2019

As a high risk website owner, you may have heard about Visa’s chargeback dispute process, or their fraud and chargeback programs. At E-Commerce 4 IM, we pay close attention to what happens in the credit card processing world. This is especially the case when it comes to credit card issuers’ new fraud and chargeback thresholds. It can make a massive difference in your everyday life as an online high risk product shop owner. To that end, there are some important changes on the horizon that you need to be aware of.

Visa is changing the thresholds to its Fraud Monitoring Program as well as its Chargeback Monitoring Program. These changes will come into effect on the first of October 2019.

To help you actively prepare for these changes, we decided to give you an outline of the biggest differences. If you want help with lowering your chargeback ratio you can contact us here or give us a call at  1-800-570-1347.

What are the changes to the Visa Fraud Monitoring Program?

Visa has its own dedicated program for monitoring fraud, simply called the “Visa Fraud Monitoring Program,” and there are two versions of it. There’s the Visa Fraud Program Standard, and Visa Fraud Program Excessive.

These two programs work in the same way with different thresholds.

It’s important for you to know that Visa uses two criteria to evaluate fraud risk within these programs. They evaluate risk based on:

  • The number of fraudulent transactions processed
  • The ratio of fraud dollars to sale dollars.

Any merchant who exceeds the thresholds for these criteria within any given month can be, but will not necessarily be, enrolled in the program. If you are in a high risk industry though, you are very likely to be enrolled if you exceed thresholds.

The Visa Fraud Monitoring Program Standard:

The current standard program applies to merchants with $75,000.00 or more in fraudulent transactions and that have a 1% or higher ratio of fraud dollars to sale dollars.

However, the new standard program has reduced the criteria further, making it available to merchants with  $75,000.00 or more in fraudulent transactions and 0.9% or higher ratio of fraud dollars to sale dollars.

Visa Fraud Monitoring Program Excessive:

The same reduction applies to the excessive category of the program, where $250,000.00 or more in fraudulent transactions remain the same when the changes come into effect in October. However, the current 2% or higher ratio of fraud dollars to sale dollars will be reduced to 1.8% or higher.

How to prepare your business for the fraud ratio changes

No matter how we look at it, the fact of the matter is that the margin for error is going to be smaller. In simple terms, you can afford fewer fraudulent transactions than before.  We highly recommend that you review your product lines and the risk-management systems you have in place. If you find that you’re borderline already, then we suggest you take further steps to improve your overall risk mitigation plans.

With the right software, you can start mitigating fraudulent transactions today. It’s far better to stop fraudulent charges from being processed than to dispute them later on. It saves time, money, and effort.

At E-Commerce 4 IM, we offer credit card processing that helps high risk businesses accept credit card payments online securely. If you want help with reducing fraudulent transactions, we can implement multiple security steps, ratio analysis, and provide assistance along the way. Our credit card processing solutions will smoothly integrate with your pre-existing e-commerce software and our chargeback mitigation will help stop chargebacks before they happen. Simply reach out to us here or give us a call at 1-800-570-1347.

For information on steps to prevent fraud and friendly fraud see our article 11 Ways High Risk Merchants Can Prevent Chargebacks.

What changes are coming to the Visa Chargeback Monitoring Program?

Similar to the changes we see coming with the fraud threshold, Visa will reduce the chargeback and dispute ratio in October 2019.

The good news, in a way, is that the Visa Chargeback Monitoring Program has similar thresholds and works in a similar way to the Visa Fraud Monitoring Program. If nothing else, it makes it easier to understand.

As with fraud, the Visa Chargeback Monitoring Program uses the number of disputes and the dispute-to-transaction ratio to evaluate risk. If you exceed these within a month, you could be enrolled in the program. To make it a bit more clear, we’ve highlighted the two versions of the program below with both the current and coming criteria.

Visa Chargeback Monitoring Program Standard:

The current program applies when there are: 100 or more disputes and 1% or higher dispute-to-transaction ratio.

The new program applies when there are: 100 or more disputes and 0.9% or higher dispute-to-transaction ratio.

Visa Chargeback Monitoring Program Excessive:

The current program applies when there are: 1,000 or more disputes and 2% or higher dispute-to-transaction ratio.

The new program applies when there are: 1,000 or more disputes and 1.8% or higher dispute-to-transaction ratio.

How to prepare your e-commerce site for the dispute ratio changes

The story remains mostly the same here as to the steps we recommend for preparing for the fraud management changes. In other words, as of October 1st, there will be a lower margin for error.

It’s more important than ever to identify risk elements early and implement chargeback prevention strategies and steps. There’re still a few months to go before these changes are implemented, which means that now is the time to review your product lines and risk-management systems.

Chargebacks are a challenge for merchants of all types, yet remain particularly challenging for high risk merchants. At E-Commerce 4 IM, we offer specialized chargeback mitigation plans and software that helps high risk merchants. It will give you near real-time alerts so you can deal with chargebacks before they’re even processed. This is a great way to lower your chargeback ratio. Overall it will save you time, money, and headaches when having to deal with chargeback disputes. If you want to know more about our chargeback prevention methods or products, you can get in touch with us here.

For more information on what you can do to mitigate chargebacks, check out our article 11 Ways High-Risk Merchants Can Prevent Chargebacks.

The Visa dispute and fraud ratio twist: Changes for acquirers too

The fine details as to how Visa is now encouraging acquirers to manage risk more actively isn’t especially important here. The gist of it is that the Visa Acquirer Monitoring Program has decreased both its fraud-to-sale ratio as well as the dispute-to-transaction ratio thresholds from 1% to 0.75%. In other words, this puts a greater incentive on the acquirer to manage merchants more strictly.

This isn’t great news for many in the high risk category.

Effectively, this will likely put greater strain on you and your business. This is because your acquiring bank will have to meet a more restricted threshold for its merchants overall. In other words, it’s more important than ever that you have the high risk credit card processing you need for your business type. That’s in addition to having a chargeback mitigation program and software that helps you reduce chargebacks in general.

At E-Commerce 4 IM, we specialize in helping site owners in the high risk category like yourself sell your products online in a safe and effective way. If you need chargeback mitigation software or programs, or need help processing credit cards, you can contact us here any time.

Make sure your business has the protection it needs

These changes to the Visa Fraud and Visa Chargeback Monitoring Programs can make a significant difference to the everyday lives of high risk merchants. As a high risk site owner, you’re likely to be more exposed to fraud and chargebacks than more standard merchants. In other words, it’s absolutely vital that you have a system in place and the protection you need to mitigate chargebacks.

Chargeback mitigation is a business critical element for most e-commerce. It’s doubly so for those selling coaching or recurring billing products online. At E-Commerce 4 IM, we specialize in making high risk e-commerce easier and offer chargeback protection plans and software that fit your business. It will also give you near real-time alerts, allowing you to take action before a chargeback is even processed. Contact us here or give us a call if you want to discuss whether you’re prepared for the new Visa Monitoring Programs.

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