Visa Fraud and Chargeback Rules Update

F2S and Chargeback Ratio Lowered to 0.9% from October 2019

Effective 1^st October 2019 Visa will apply new thresholds to improve the efficiency of the Visa Fraud Monitoring Program (VFMP) and the Visa Chargeback Monitoring Program (VCMP).

The main purpose of these Visa programs is to protect cardholders against fraud, protect the integrity of the Visa payment system, and introduce a standardised framework across the world.

Visa calculates the fraud and chargeback ratios as following:

VFMP: Fraudulent transactions (in USD) reported in the past month divided by the sales of the merchant for the past month (in USD) to get the fraud-to-sales ratio.

VCMP: Chargebacks reported in the past month divided by the sales count for the past month to get the chargeback ratio (CTR).

Both programs only take into consideration cross-border transactions, i.e. intra and inter-regional transactions.

The new thresholds from October 2019

Visa has three thresholds: warning, standard, and excessive. However, Merchants qualified as high risk (MCC’s: 5962, 5966, 5967, 7995, 5912, 5122) will automatically fall under the Excessive Non-Compliance Assessments even if they only break the Standard threshold.

Program	Criteria
VCMP Standard	• 100 or more in dispute count and • 0.9 % or higher ratio of dispute count-to-sales count
VCMP Excessive	• 1,000 or more in dispute count and • 1.8 % or higher ratio of dispute count-to-sales count
VFMP Standard	• USD 75,000 or more in fraud amount and • 0.9 % or higher ratio of fraud dollar-to-sales dollar amount
VFMP Excessive	• USD 250,000 or more in fraud amount and • 1.8 % or higher ratio of fraud dollar-to-sales dollar amount

In case of exceeding a threshold, Visa will inform PBT Pay. In turn, we will notify our Merchants and will work closely with them to cut down the fraud/chargeback levels. Please, note that non-compliant activity triggers a non-compliance fee. Merchants breaching the Excessive thresholds will be assigned a Non-Compliance Assessment fine for each month of a breach.

PBT Pay is taking this opportunity to notify all of the Merchants to take appropriate action to ensure they maintain adequate risk controls to stay below the program thresholds.

Therefore, we would like to advise you to check and confirm that your terms and conditions are properly disclosed to consumers and that you operate in compliance with the PBT Pay’s recommendations as well as Visa’s new rules on fraud and chargeback.

If you need any assistance or more information on PBT Pay’s chargeback and fraud policies, please, contact your Relationship Manager.

Visa COVID-19 Update: Policy for Subscription Merchants Offering Free Trials

As we have already informed you in our previous blogs, Visa is updating its acceptance, disclosure and dispute policies for transactions at merchants that offer free trials or discounted introductory promotions as part of an ongoing subscription service. The changes apply to merchants selling either physical or digital goods and services if they offer free trials or introductory offers that roll into a recurring agreement.

New Visa Requirements

Here is the summary of the new Visa requirements:

express consent to entering an ongoing subscription service for recurring payments
enhanced electronic confirmation that contains a simple mechanism to enable the cardholder to cancel any subsequent transactions online easily
explicit transaction receipts stating the length of any trial period, introductory offer or promotional period, including clear disclosure that the cardholder will be charged unless the cardholder takes steps to cancel any subsequent transactions
easier cancellation similar to “unsubscribing” from an email distribution list
additional statement descriptor (e.g., “trial,” “trial period,” “free trial”) that appears on cardholder statements
expanded dispute rights and updated Visa complaint forms for issuers and cardholders
expanded policy for negative option and up-selling merchants

As we are all struggling with the effects the COVID-19 pandemic has on our lives, Visa has decided to postpone some aspects of this new policy change to ease the impact of this situation on the payment system.

Enhanced Statement Descriptor

The effective date of the requirement to support an enhanced descriptor for the first transaction at the end of a trial or discounted promotional period will be postponed to 17 April 2021.

Disclosure, Notification and Cancellation Requirements

The effective date for the additional aspects of the updated policy will remain 18 April 2020.

Visa’s reasoning is that a significant number of consumers around the world are sheltering in place/at home, and many of them are utilizing subscription services for the first time, often with a trial or introductory promotional discount (e.g., digital content/streaming, delivery of food or other goods). Therefore, it is vital to keep this effective date unchanged.

These additional aspects include:

Express cardholder consent for transactions beyond the promotional period, and the requirement for merchants to provide a copy of the accepted terms and conditions to the cardholder at the time of enrollment
Reminder notification to cardholder before the end of the trial/introductory promotional discount period
Enhanced transaction receipts disclosing the details of the trial/introductory promotional discount period, including clear disclosure that the cardholder will be charged unless the cardholder takes steps to cancel any subsequent transactions
Easier online cancellation, regardless of how the cardholder initially interacted with the merchant

Visa is taking a pragmatic approach during the COVID-19 pandemic, focusing primarily on situations where payment system integrity is at risk. However, we strongly recommend that you remain compliant with the card scheme rules to avoid unnecessary disputes.

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