What Merchants need to know about the Visa Fraud Monitoring Program

As a merchant, you know the exorbitant financial cost of both chargebacks and credit card fraud. Not only can these issues cut into your company’s profit, but they can also land your organization in trouble with card networks like Visa.

Visa’s fraud prevention program enforces limits on the number of fraudulent transactions your company can process. Going over the limit of fraudulent transactions will land your company in the Visa Fraud Monitoring Program, where failure to resolve the issue can incur fines or lead to Visa refusing to process payments with you altogether.  

What is the Visa Fraud Monitoring Program (VFMP)? 

The Visa Fraud Monitoring Program regularly assesses merchants to ensure they are falling below fraud thresholds. If a monthly evaluation shows that a merchant has exceeded the fraud threshold, the VFMP will notify the merchant and place them in the proper VFMP category based on the severity of the issue. These three categories, early warning, standard, and excessive, have different fees and consequences to incentivize merchants to fix fraud issues quickly.  

The Visa Fraud Monitoring Program calculates the severity of a merchant’s fraud issue by considering the percentage of fraudulent transactions the merchant processes and the dollar amount of fraudulent transactions. This minimum dollar amount was added to ensure that small businesses weren’t overly affected by VFMP. 

Aside from the three main categories of merchants in the VFMP (early warning, standard, and excessive) there’s an additional program for merchants in the United States that use 3-D Secure. Merchants who fall into the VFMP-3DS program are not only liable to fines, they can also lose fraud liability protections they enjoyed by using 3-D Secure. 

Being in the Visa Fraud Monitoring Program isn’t good. It not only means that your company is looking at considerable fines, but it also means that your company is facing a concerning fraud rate. Identifying and addressing that problem will be essential to keep your company running smoothly.  

We’ll look at the consequences and fines of the VFMP in a bit, but first let’s look at what level of fraud could land you in the program, and what your path forward will look like if you enter the VFM program.  

How Does the VFMP Process Work? 

How do you end up in the VFM program? Visa checks merchants’ fraud rates monthly, and if your business has a growing fraud problem, Visa wants to catch that issue as soon as possible. Most merchants that enter the VFMP will get an “early warning” notification to let them know that their fraud rates are headed in the wrong direction. Meeting the VFMP “early warning” threshold doesn’t mean that a merchant is enrolled in the program yet, just that they need to address their fraudulent transactions to avoid being placed in the VFMP.  

An early warning is an opportunity for merchants to address the problem without facing the consequences of the VFMP. However, not all merchants will have the benefit of an early warning. If a merchant’s fraud rate spikes dramatically, they may jump into the standard or excessive threshold within a month, bypassing the early warning category and going straight into VFMP. 

This chart shows the fraud rate and minimum dollar amount of fraudulent transactions a merchant must reach to be enrolled in a VFM program: 

Threshold Category	Fraud Rate	Minimum Fraud Amount
VDMP Early Warning	0.65%	$50,000 in total
VDMP Standard	0.9%	$75,000 in total
VDMP Excessive	1.8%	$250,000 in total
VDMP 3DS Early Warning	0.5%	$5,000 from 3DS transactions
VDMP 3DS Standard	0.75%	$7,500 from 3DS transactions

If a merchant is able to address their fraud problem while in the “early warning” category, they may walk away with no fines. Fines and penalties start when a merchant reaches the standard or excessive category, and that’s what we’ll look at next. 

VFMP Fines for Standard and Excessive Fraud Issues 

The fines for merchants who meet the standard fraud threshold and excessive fraud thresholds differ mainly in their timeline of execution. While merchants who enter the VFMP standard level have up to four months to resolve the issue, merchants who enter the VFMP excessive level will start paying fines immediately. 

It should be noted that fines are not the only consequences a merchant will face. Merchants in both the standard and excessive categories will lose liability shift for their 3DS transactions immediately. This means issuers can raise fraudulent disputes on transactions, even if they were 3DS secured transactions. 

Here’s a quick breakdown of VFMP fines: 

VFMP Standard Fine Timeline 

Months in the Program	Fines for VFMP Noncompliance
1-4 Months	No Fines
5-6 Months	$25,000
7-9 Months	$50,000
10-12 Months	$75,000

It should be noted that if a merchant exits the standard threshold, but is unable to remain there for three months, the timeline doesn’t restart. Every month the merchant has already spent in the program will count, and the 4-month grace period will not restart. 

Merchants who surpass the standard VFMP threshold for over a year are also in danger of losing their ability to remain in the Visa Network altogether.  

VFMP Excessive Fine Timeline 

Months in the Program	Fines for VFMP Noncompliance
1-3 months	$10,000
4-6 months	$25,000
7-9 months	$50,000
10-12 months	$75,000

Merchants in the Excessive category may face fines outside of the standard ones listed here based on the severity of their unique case.  

The most important thing to note about VFM program consequences is that, after 12 months, a merchant in either program can have their ability to accept Visa payments stripped away. These fines act as an incentive to resolve issues quickly but are not the consequence merchants should be most worried about. The potential loss of Visa customers, and the revenue they generate, should be a merchant’s main concern.  

How Do I Leave (or Avoid) the VFMP? 

Visa will remove merchants from the VDM program when the level of fraudulent transactions drops below the standard threshold for three months in a row. Achieving a fraud threshold below 0.9% may be a daunting task for merchants in high risk categories, or merchants who don’t have proper preventative measures in place.

Utilizing fraud monitoring systems that can identify fraudsters and assess transaction risk will be your biggest ally in fighting fraud. FRaud prevention companies, like Kount, use AI backed fraud monitoring tools to evaluate transactions and decline high risk transactions while minimizing false declines. Other tools, like 3DS, strengthen customer authentication and prevent fraud.  

Upgrading your payment security will not only preserve your ability to continue working with Visa, but it can also reduce false declines and chargebacks and increase approval rates. If you’re interested in learning more about fraud prevention methods, read our blog on the best 7 fraud prevention platforms, or check out our integration with Kount’s advanced fraud prevention platform.