Visa fraud and chargeback monitoring programmes

Transcription

1 Visa fraud and chargeback monitoring programmes Overview To better assist acquirers in managing their merchants with excessive chargeback or fraud activity, effective from 1 July 2016, Visa will replace all current fraud and chargeback programmes with newly aligned programme thresholds, timelines, and Non-Compliance Assessments (NCA). This will improve both the acquirer and merchant ability to identify fraud behavior and focus on timely remediation of violations. As part of this effort, Visa Europe will rebrand the programmes as follows: Merchant Chargeback Monitoring Programme Visa Chargeback Monitoring Programme (VCMP) Merchant Fraud Performance Programme Visa Fraud Monitoring Programme (VFMP) To facilitate the transition to the new programmes, there will be no programme identifications from the existing programmes for the June 2016 cycle. The alignment of global and regional metrics strengthens the protection of the Visa payment system Regional and legacy programmes Regional and global legacy programmes are being integrated into the new fraud and chargeback monitoring programmes to simplify acquirer operations and continue to rapidly identify excessive chargebacks and/or fraud. For more information Contact your Visa Europe representative

2 Visa Fraud Monitoring Programme (VFMP) Faster identification To eliminate a day reporting lag, all programme IDs will be based on fraud post date for the prior month and sales purchase date of the prior month. Uniform programme ratios and timeline Align domestic and global metrics, timelines and fees across all countries. New rules and policies High risk merchants will be included in the high risk fraud programme. New thresholds The Visa Fraud Monitoring Programme will review the previous month s reported fraud transactions by fraud post date against that month s sales transactions by purchase date. In the VFMP, merchants will be identified monthly by the acquirer s Business Identification (BID) to determine whether they meet or exceed the following standard fraud thresholds: US $75,000 or more in reported fraud and 1% or more in Fraud-to-sales amount ratio The Visa Fraud Monitoring Programme monitors domestic and international transactions in Germany and the United Kingdom. In all other countries, the Visa Fraud Monitoring Programme monitors only international transactions (issuer country not equal to merchant country). Early warning notifications provide opportunity to reduce fraud levels before merchant is identified in VFMP Early warning notifications Early warning notifications provide acquirers and merchants with an opportunity to reduce fraud levels before a merchant is identified in the Visa Fraud Monitoring Programme. Visa provides acquirers with monthly notifications about merchants that have not exceeded the programme thresholds, but have satisfied the following qualifications in the previous month: US $50,000 or more in reported fraud and 0.75% or more in fraud-to-sales amount ratio New Visa Fraud Monitoring Programme thresholds Fraud rate Fraud $ Standard threshold 1% $75 K Excessive threshold 2% $250 K Early warning threshold 0.75% $50 K Note: In cases with egregious fraud or chargeback activity, Visa Europe may require the immediate termination of the merchant agreement or impose member risk reduction requirements on the acquirer to expedite remediation efforts, as described by the Visa Europe operating regulations.

3 Enhanced Fraud Programme timeline The refresh of our fraud monitoring programmes includes: Shifting focus to card-not-present outliers Chargeback identifications/fees to take precedence, when dual chargeback/fraud IDs occur Standard Fraud Programme timeline: (F/S Ratio >= 1% and fraud amount >=$75k) Notification Workout Enforcement Warning period no Non Compliance Assessment (NCA) No fees; the acquirer may be eligible for RC93 chargeback Excessive threshold timeline (F/S ratio >= 2% and Fraud amount >= $250k) $10k $10k $10k $25k $25k $25K $50K $50K $50K $75K $75K $75K Non Compliance Assessment (NCA); the acquirer may be eligible for RC93 chargeback High risk timeline (F/S ratio >= 1% and fraud >=$75k) applies to: All merchants in the high risk MCCs (5122, 5912, 5962, 5966, 5967,7995) Merchants, at Visa Europe s discretion, may be accelerated to the high risk timeline based on a review of merchant performance and business practices (e.g., abuse of free trial periods, negative renewal options etc.) $10k $10k $10k $25k $25k $25K $50K $50K $50K $75K $75K $75K Non Compliance Assessment (NCA); the acquirer may be eligible for RC93 Chargeback The acquirer may be eligible for chargeback Reason Code 93 (fraud Merchant Fraud Performance Programme) for fraudulent transactions at merchant outlets which meet or exceed the thresholds until effective remediation of the merchant outlet. Based on a review of merchant performance and business practices, Visa Europe may at its discretion impose risk conditions such as: 1. Removal of workout periods for egregious entities 2. Prohibition to on-board new card-not-present merchants Enhance focus on timely remediation of card-not-present violations

4 Visa Chargeback Monitoring Programme (VCMP) Faster identification All programme IDs will be based on chargeback central processing date and sales purchase date of the prior month. Chargeback identifications and penalties will take precedence in the case of simultaneous identifications in both the chargeback and fraud monitoring programmes. Uniform program ratios and timelines Align domestic and global metrics, timelines and fees across all countries. New rules and policies Changes in the issuer chargeback reimbursements. New threshold and timeline for the excessive programme. New thresholds The Visa Chargeback Monitoring Programme will review the previous month s reported chargeback transactions by central processing date against that month s sales transactions by purchase date. In the VCMP, merchant outlets will be identified monthly by the acquirer s Business Identification (BID) to determine whether they meet or exceed the following standard chargeback thresholds: 100 or more chargebacks and 1% or more chargeback-to-sales count ratio Chargeback Monitoring Programme helps the merchant improve their acceptance practices and reduce risk The Visa Chargeback Monitoring Programme monitors domestic and International transactions in Germany and the United Kingdom. In all other countries the Visa Chargeback Monitoring Programme monitors only International transactions (issuer country not equal to merchant country). Early warning notifications Early warning notifications provide acquirers and merchants with an opportunity to reduce chargeback levels before a merchant is identified in the Visa Chargeback Monitoring Programme. Visa Europe provides acquirers with monthly notifications about merchants that have not exceeded the programme thresholds, but have satisfied the following qualifications in the previous month: 75 or more chargebacks and 0.75% or more chargeback count to sales count ratio New Visa Chargeback Monitoring Programme thresholds CB rate CB count Standard threshold 1% 100 Excessive threshold 2% 500 Early warning threshold 0.75% 75 Note: In cases with egregious fraud or chargeback activity, Visa Europe may require the immediate termination of the merchant agreement or impose member risk reduction requirements on the acquirer to expedite remediation efforts, as described by the Visa Europe operating regulations.

5 Enhanced Chargeback Programme timeline The refresh of the Chargeback Monitoring Programme: Includes notification and workout periods prior to entering enforcement Reflects evolving transaction risks that addresses fraud and other qualitative factors Establishes the chargeback identifications/fees to take precedence when dual chargeback and fraud programme IDs occur Standard Chargeback Programme timeline (CB/Sales count ratio >= 1% and CB count >= 100) Notification Workout Enforcement No Non Compliance Assessment (NCA) $50 per CB Non Compliance Assessment (NCA) $100 per CB Non Compliance Assessment (NCA) $100 per CB Non Compliance Assessment (NCA); $25k review fee Excessive Programme timeline (CB/Sales Count Ratio >= 2%, and CB Count >= 500) $100 per CB Non Compliance Assessment (NCA) $100 per CB Non Compliance Assessment (NCA); $25K review fee High risk timeline (CB/Sales Count Ratio >= 1%, CB Count >= 100) Merchants with high risk MCC (5122, 5912, 5962, 5966, 5967, 7995) or Visa Europe, at its discretion, may move merchants into the high risk timeline based on a review of merchant performance and inappropriate business practices (e.g., use of abusive free trial policies, negative renewal options etc.) $100 per CB Non Compliance Assessment (NCA) $100 per CB Non Compliance Assessment (NCA); $25K review fee Visa Europe may, at its discretion, impose member risk reduction requirements in situations where poor business practices are observed. Examples of risk conditions are: 1. Removal of merchant workout periods for egregious acquirers 2. Prohibition of onboard new card-not-present merchants For more information Please consult the Visa Europe operating regulations, Visa Europe member letter VE 07/16 and the risk management section of VisaOnline.com