July 28, 2028
by David Goodale
What are the Visa and MasterCard Chargeback Thresholds?
(Slightly edited from video transcript for greater readability)
Key Takeaways
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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