The security of payment systems is crucial in a society where electronic transactions are the norm. Visa, one of the largest payment networks in the world, has put into place the VDMP (Visa Dispute Monitoring Program) and VFMP (Visa Fraud Monitoring Program), two fraud programs to regulate issuers, acquirers and merchants to control fraud. Let’s see how the Visa Fraud Program works
Visa Disputes Monitoring Program(VDMP):
The Visa payment network’s chargeback disputes are monitored and managed via the proactive program known as VDMP. Chargebacks happen when cardholders contest transactions for a variety of reasons, such as problems with goods or services or unauthorized payments.
Visa continuously examines chargeback activity across its network to spot trends and irregularities. VDMP establishes predefined chargeback rate thresholds. If a merchant goes over these limits, a review procedure is started. The details are shown below:
| stage | Threshold | Needed action | Fine or not | How to exit |
| Early Warning | dispute rate (count)>=0.65% & dispute count>=75 | take actions to reduce fraud | No | stay below 0.65% for 3 consecutive months |
| Standard | dispute rate (count)>=0.9% & dispute count>=100 | submit formal remediation plans & take actions to reduce fraud | Kind of (fine applies after the first 4 months, if still in the program) | stay below 0.9% for 3 consecutive months |
| Excessive | dispute rate (count)>=1.8% & dispute count>=1000 | submit formal remediation plans & take actions to reduce fraud | Yes, immediately applies | stay below 0.9% for 3 consecutive months |
Visa Fraud Monitoring Program(VFMP):
VFMP is responsible for keeping an eye out for and detecting potential fraud across the payment network. Prior to having an effect on cardholders and businesses, it seeks to identify and prevent fraud. Similar as VDMP, VFMP also has different stages, the details are shown below:
| stage | Threshold | Needed action | Fine or not | How to exit |
| Early Warning | fraud rate (amount)>=0.65% & fraud amount>=50,000 | take actions to reduce fraud | No | stay below 0.65% for 3 consecutive months |
| Standard | fraud rate (amount)>=0.9% & fraud amount>=75,000 | submit formal remediation plans & take actions to reduce fraud | Kind of (fine applies after the first 4 months, if still in the program) | stay below 0.9% for 3 consecutive months |
| Excessive | fraud rate (amount)>=1.8% & fraud amount>=250,000 | submit formal remediation plans & take actions to reduce fraud | Yes, immediately applies | stay below 0.9% for 3 consecutive months |
VDMP vs VFMP
While VDMP and VFMP share many similarities, they do have some differences. The key disparities are highlighted below.
| Aspect | VDMP | VFMP |
|---|---|---|
| Purpose | Manages and monitors chargeback disputes. | Detects and prevents potential fraud in real-time. |
| Calculation | 1) Based on count 2) Overall dispute count | 1) Based on amount 2) Focus on fraud amount |
| Data | chargeback and TC40 | fraud related chargeback and TC40 |
Can VDMP and VFMP apply simultaneously?
Unfortunately yes, it is possible for the same issuer/merchant to be part of both VFMP and VDMP simultaneously, as VFMP targets fraud and uses amount, while VDMP deals with disputes and uses count.
To sum up, Visa is committed to upholding the reliability and security of its payment network, and VDMP and VFMP are crucial parts of that effort. VFMP is committed to early fraud detection and prevention, while VDMP is focused on addressing chargeback disputes. Together, they contribute to a secure and dependable payment infrastructure for both consumers and companies, making Visa a globally recognized option for electronic payments.
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