You’re not the only one interested in keeping your chargeback ratio as low as possible. Financial institutions also take steps to protect their cardholders against unfair business practices. They empower businesses to improve their own operations from a dispute management perspective, too.

One example of this is the Visa Dispute Monitoring Program, or VDMP for short. If you’re here reading this guide you may already have found yourself enrolled in the program - but what exactly is it, and what can you do to work your way out of it?

Upon enrollment, you and your acquiring bank must uncover the culprit behind your excessive chargeback rate and come up with a remediation plan to get back on track. In the meantime, you could be subject to aggressive fees as an incentive to take the matter seriously.

Learn more below, including how our chargeback company can help you bring your chargeback rate down by preventing up to 99% of disputes on autopilot - while actively fighting ongoing chargebacks on your behalf.

What is the Visa Dispute Monitoring Program?

Visa developed this regulatory framework to identify and mitigate excessive chargeback rates. The primary goal is to protect the integrity of the Visa network along with all parties involved, most notably cardholders but also merchants and issuers.

As touched on earlier, placement in the program means you’re either approaching an unacceptable ratio of chargebacks relative to the number of transactions you process, or you’re already there.

Either way, Visa will put the onus on you and your acquiring bank to figure out what’s going on and come up with a plan to fix the issue. We’ll get into what exactly the chargeback rates are that could land you in VDMP in a moment, as there are three different tiers.

It can be frustrating to find yourself with another obligation on your plate, one you didn’t sign up for. You may feel like you’re being taken advantage of by fraudulent customers - and maybe you are.

But ultimately, excessive chargebacks can be traced back to a flaw in your billing process or operations - be it poor fraud detection practices, lackluster customer service, overpromising and underdelivering, or any combination of these.

The good news is that the roadmap to reducing your chargeback rates is fairly simple. We’ll share it with you later on as we talk about how to prevent chargebacks.

Early Warning, Standard, and Excessive Thresholds for VDMP Enrollment

Like we touched on above, there are three different categories Visa will place you in based on your chargeback ratio - early warning, standard, or excessive. Each has its own implications:

Early Warning Threshold

This is the preliminary alert that your chargeback levels are starting to become a concern. There are no monetary penalties at this threshold as it’s simply a chance to get the issue under control before your rate climbs any higher. The criteria for placement here is a ratio 0.65% or higher and at least 75 total disputes.

Standard Threshold

The real issue arises when your chargeback rate exceeds 0.9% and you’ve faced more than 100 disputes. This category indicates that the issue has gotten to a point where immediate attention is necessary. 

You won’t face any fines here either - at least not for the first 4 months. Visa gives you ample runway to bring your chargeback rate down. But after that, you’ll have to eat a $50 fee per dispute.

Excessive Threshold

This tier is for those who are getting hit with chargebacks at an egregious level - above 1.8% with at least 1,000 disputes total.

Merchants in this category face the most severe consequences and must take immediate corrective actions. For example, you’re hit with a $50 fine per dispute immediately. If you don’t make your way out of the program within 10 months, you could face review fees of up to $25k!

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It’s worth noting that Visa is aware of customers making numerous transactions and then disputing them all, and the spike effect this can have on your chargeback rate. They’ve put in measures so that only the first 10 for a given card number count against your ratio.

Business Implications of Enrollment in VDMP 

You know how chargebacks affect a business, but what exactly does enrollment in the Visa Dispute Monitoring Program mean for you? We touched on some of the implications earlier, like the dispute fees - but there’s a lot more that you need to be aware of as well. 

Merchants in the VDMP are subject to additional fees imposed by acquiring banks to cover the administrative costs of managing high-risk accounts. These can include monthly fines and increased transaction fees.

High chargeback ratios may lead to withheld funds from acquirers, too. Banks may hold back a percentage of the merchant’s revenue as a reserve to cover potential chargeback liabilities.

The real issue with ending up in the VDMP is the operational impact it can have on your business. You’ll find yourself dealing with more stringent reporting requirements, and the administrative workload can divert resources away from core business activities.

If you end up stuck in the program for more than a year, you could lose the ability to accept Visa cards. But it’s not just Visa that could cut you off - acquiring banks could determine that doing business with you is simply not worth the risk.

Ultimately, you could end up finding yourself unable to process transactions. In other words, you won’t be able to do business. Fortunately, we’re going to help you work your way out of the Visa Dispute Monitoring Program with some tips below.

How to Work Your Way Out of the Visa Dispute Monitoring Program

The good news is that the entire point of the VDMP is to correct improper practices, not punish them. Visa wants to do business with you and will set you up for success with advice on working your way out of the program as fast as possible. Your acquiring bank will offer guidance along the way as well. In the meantime, here are some tips to speed things up and get back on track.

Immediate Actions Upon Enrollment

Rather than panicking or feeling attacked, stay calm. Thoroughly review your chargeback reports to identify patterns and root causes of disputes. This will help you pinpoint specific issues that need immediate attention.

If they haven’t already reached out to you, you should communicate with your acquiring bank to understand the exact criteria and thresholds you have exceeded. Knowing these details will guide your action plan.

See if there are any easily fixable issues you can tackle first to start generating quick wins. If you don’t require CVV information or don’t have fraud scanning in place, for example, set it up. We’ll share some more advanced prevention strategies below.

Effective Chargeback Prevention Strategies

Disputifier is your trusted partner in chargeback prevention and management - you can simply get set up with us to put the stress of disputes in the past for good. In general, though, here’s how to avoid disputes:

• Use advanced fraud detection tools to monitor transactions in real time. Implement filters that flag high-risk transactions for manual review.
• Clearly display your return, refund, and cancellation policies on your website. Make sure these policies are easy to understand and accessible to customers.
• Provide multiple channels for customers to reach you, such as live chat, phone support, and email. Prioritize quick response times to customer inquiries so that your customers don’t end up resorting to chargebacks instead.
• Train your customer service team to handle disputes effectively and amicably. Prompt and clear communication can often resolve issues before they escalate to chargebacks.
• Do not overpromise and underdeliver. It’s obviously important to market your business effectively, but you don’t want to be deceptive. Set realistic expectations, provide clear photos, and follow up with customers after the fact to assess their satisfaction. Simply being proactive in looking for problems before they make their way to you can be a huge step in the right direction.

One of the best pieces of advice we have to offer is to refund customers whenever you can - even if it means losing out on revenue that you can’t recover with a return. At this point, it’s about keeping your business running smoothly. Only fight chargebacks you have to.

RDR (Rapid Dispute Resolution)

RDR is a program offered by Visa and distributed through companies like Disputifier. It helps reduce 99-100% of incoming Visa chargebacks. This means that you’ll essentially immediately stop your VDMP issues. The trade off is that all Visa chargebacks (besides ones outside your set rules) are going to be automatically refunded with no chance to recoup the funds. 

If you want to setup RDR and stop worrying about VMDP, contact us today.

Monitoring and Adjusting Strategies

Continuously monitor your chargeback ratios and related data. Identify any new patterns or emerging issues that need to be addressed. Your acquiring bank will likely follow up with you monthly on your progress, so you won’t have to wonder how your rates are trending.

Hopefully, these tips help you navigate through the Visa Dispute Monitoring Program and come out on the other end even better. If you really want to speed things up and stop stressing about disputes for good, though, the best chargeback prevention company is here to help.

Avoid VDMP By Preventing 99% of Chargebacks With Disputifier!

Disputifier is the trusted choice for AI-powered dispute prevention and management. We have a comprehensive system in place that allows you to prevent 99% of chargebacks automatically.

These include chargeback alerts powered by Verifi and Ethoca, fraud-scanning tools, and order-not-received solutions. Each of these has its place in shielding against various types of chargebacks, from fraud chargebacks to chargeback for services not rendered. 

We’ve made sure to include measures that prevent false positives which would cost you unnecessary revenue losses. You can customize the parameters for which types of orders you accept and which you automatically refund.

Simply using our prevention service will put you on the fast track to making your way out of VDMP. But that’s not all. We also fight chargebacks for you automatically when they occur.

Because we fight thousands of disputes monthly we’ve gotten better and better at preparing rebuttal packages, boosting win rates over time. Today, we’re proud to say we can help you win up to 70% of the time. Each response is customized to the specific dispute at hand.

Plus, you won’t pay unless we win the chargeback for you - it’s a risk-free strategy! So, learn more about how it works and discover how much easier dispute management can be with the power of Disputifier today.

Final Thoughts on the Visa Dispute Monitoring Program

Placement in the Visa Dispute Monitoring Program can be frustrating and confusing - but we hope this guide has left you with a clearer understanding of what exactly it is and what your next steps should be.

Being proactive is the best way to work your way out of VDMP fast - so look for areas of improvement in your business and consider investing in a tried-and-true solution like Disputifier.

Find additional resources in our blog like what happens if you lose a chargeback, chargeback email to customer, merchant chargeback insurance, compliance chargeback, chargeback vs dispute, how to protect against chargebacks for item not as described, and many more. 

Or, better yet, stop worrying about chargebacks once and for all. You can let us handle everything for you so that you can focus on growing the business rather than stopping the bleeding that chargebacks cause.

Don’t risk your chargeback rate climbing any higher and placing you in the next threshold of the program. Protect your business and enhance your chargeback management strategy today.