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July 28, 2028
by David Goodale

What are the Visa and MasterCard Chargeback Thresholds?

(Slightly edited from video transcript for greater readability)

Key Takeaways

1
Different Chargeback Levels
The first level does not result in fines, but gives you a chance to fix your chargeback problem. The second threshold level introduces possible fines. The third level introduces significant fines and potential account termination.
2
Work With Your Processor
If you have a chargeback problem be proactive and contact your processor. Tell them what went wrong, how you're going to fix it, with a date on when it will be done.
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Here are the chargeback thresholds as of 2023:

Visa
Program Timeline VDMP - VISA Dispute Monitoring Program VFMP - VISA Fraud Monitoring Program
Thresholds Non-Compliance Assessments Thresholds Non-Compliance Assessments
Early Warning 75 dispute count; and
0.65 percent (65 basis points) dispute-to-sales count ratio.
US$50,000 fraud amount; and
0.65 percent (65 basis points) fraud-to-sales amount ratio.
Thresholds Non-Compliance Assessments Thresholds Non-Compliance Assessments
Standard 100 dispute count; and
0.9 percent (90 basis points) dispute-to-sales count ratio.
Month 1-4 = no non-compliance assessment
Month 5-6 = $50 per dispute
Month 7-9 = $50 per dispute
Month 10-12 = $50 per dispute + $25K review fee
US$75,00 fraud; and
0.9 percent (90 basis points) fraud-to-sales amount ratio.
Month 1-4 = no non-compliance assessment
Month 5-6 = $25,000 fee per month
Month 7-9 = $50,000 fee per month
Month 10-12 = $75,000 fee per month
Thresholds Non-Compliance Assessments Thresholds Non-Compliance Assessments
Excessive & High Risk (by MCC) 1,000 dispute count;
1.8 percent (180 basis points) dispute-to-sales count ratio.
Month 1-4 = $50 per dispute
Month 5-6 = $50 per dispute
Month 7-9 = $50 per dispute + $25,000 review fee
Month 10-12 = $50 per dispute + $25,000 review fee
US$250,000 fraud amount; and
1.8 (180 basis points) fraud-to-sales amount ratio.
Month 1-4 = $10,000 fee per month
Month 5-6 = $25,000 fee per month
Month 7-9 = $50,000 fee per month
Month 10-12 = $75,000 fee per month
Mastercard
1 Tier ECM - Excessive Chargeback Merchant Program Thresholds Non-Compliance Assessments
Number of Chargebacks: 100 to 299 in a calendar month; and
Monthly Chargeback-to-Transaction (CTR): 1.50% to 2.99% (150 to 299 bps)
Month 1 = $0
Month 2 = $1,000 EUR/USD
Month 3 = $1,000 EUR/USD
Month 4 to 6 = $5,000 EUR/USD*
Month 7 to 11 = $25,000 EUR/USD*
Month 12 to 18 = $50,000 EUR/USD*
Month 19+ = $100,000 EUR/USD*
*Merchant may also receive an Issuer Recovery Assessment, in which they must pay $5 USD for each chargeback after the first 300.
Mastercard also charges a $100 reporting fee and an issuer recovery fee, which may vary
2 Tier HECM - Excessive Chargeback Merchant Program Thresholds Non-Compliance Assessments
Number of Chargebacks: 300 or more; and
Monthly Chargeback-to-Transaction Ratio (CTR): 3.00% or more (300 bps or higher)
Month 1 = $0
Month 2 = $1,000 EUR/USD
Month 3 = $2,000 EUR/USD
Month 4 to 6 = $10,000 EUR/USD*
Month 7 to 11 = $50,000 EUR/USD*
Month 12 to 18 = $100,000 EUR/USD*
Month 19 = $200,000 EUR/USD*
Merchant may also receive an Issuer Recovery Assessment, in which they must pay $5USD for each chargeback after the first 300.
Mastercard also charges a $100 reporting fee and an ussyer recovery fee, which may vary
EFM - Excessive Fraud Merchant
Program Thresholds Non-Compliance Assessments
A merchant is identified by the EFM program if all of the following conditions are met:
1. Minimum of 1,000 e-commerce transactions in clearing;
2. Monthly net fraud is greater than the $50,000 or more EUR/USD
3. Monthly net fraud is greater than 0.50% (50bps)
4. Penetration of 3DS and/or Data Only transactions is less than total card-not-present volume threshold of: 50% (Europe) / 10% (U.S. and Canada)
Month 1 = $0
Month 2 = $500 EUR/USD
Month 3 = $1,000 EUR/USD
Month 4 to 6 = $5,000 EUR/USD
Month 7 to 11 = $25,000 EUR/USD
Month 12 to 18 = $50,000 EUR/USD
Month 19+ = $100,000 EUR/USD

It is very important that merchants stay within Visa and Mastercard guidelines for acceptable levels of chargebacks. If you do not, you run the risk of fines, or even having your account closed. These fines can be significant, and if you lose your account due to excessive chargebacks you may even find it difficult to obtain a merchant account elsewhere in the future.

If you do start to get too many chargebacks you should alert your payment processor before they even reach out to you. However, even if you've already been contacted because you are on one of the monitoring programs you can still address the problem.

Once you are on a monitoring program it's important to implement a remediation plan that addresses why the problem has occurred, and how you are going to address it. It's very important to openly and transparently address what failures led to the problem, and how you are going to fix it. Once you have the plan, you need to put it in place because this is a time sensitive issue. The longer the problem persists the more likely it is for fines, or even potential account termination.

Summary

If you have problems with chargebacks, it's important not to be lackadaisical in your efforts to deal with them. Work closely with your processor, let them know that you are taking this seriously, and what you are doing about it. If you are running into a problem with chargebacks and would like our advice, feel free to reach out to us at Merchant-Accounts.ca to discuss your problem.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant Accounts.ca. I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

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Direct: (905) 901-2254
david.goodale@merchant-accounts.ca