VAMP 101: Visa’s New Fraud Rules—Explained in 10 Minutes

Are chargebacks really the biggest threat to a merchant account? Not anymore. In under 10 minutes, Frank breaks down everything business owners need to know about Visa’s new Visa Acquirer Monitoring Program (VAMP)—a major policy shift that’s already impacting how merchants are evaluated. With thresholds tightening and acquiring banks under pressure, over 250,000 merchant accounts are expected to be shut down by the end of 2025. If your business processes credit card payments, this episode is a critical listen.

In this episode, these questions and topics will be covered:

• 01:20 – What the VAMP program is and why it replaces two previous Visa monitoring systems.
• 02:17 – The role of TC40 fraud reports and why they now matter just as much as chargebacks.
• 06:33 – How to calculate your fraud ratio and what the new thresholds mean for businesses.
• 07:22 – The types of merchants most at risk. 
• 08:50 - The steps merchants should take to prepare for the new VAMP guidelines and how PayDiverse’s VAMP Monitoring Tool helps merchants stay compliant and avoid penalties.

Don’t wait until Visa flags or fines your account. Start monitoring your fraud metrics now. To learn more about VAMP compliance or to get visibility into TC40 reports, visit the PayDiverse website or connect with Frank Cena for personalized support.

Connect with PayDiverse:
Instagram: https://www.instagram.com/paydiverse
Website: http://www.paydiverse.com
LinkedIn: https://www.linkedin.com/in/franksena

Transcript

UNKNOWN: 0:00

Thank you.

SPEAKER_00: 0:05

Hey, welcome to The Payments Guy, your ultimate guide to demystifying the confusing world of merchant payments. I'm Frank Senna, your host, a merchant payment specialist with nearly a decade of experience. In each episode, we'll break down the toughest challenges in the payment space so you can be better informed when navigating payments for your own business. From minimizing the impact of chargebacks, avoiding funding issues, and ensuring you're never stuck without the ability to process payments, we'll help you make smarter decisions If you're still thinking that chargebacks are the biggest threat to your merchant account, Think again. Visa just changed the game with a powerful new rule called VAMP, and it's already in effect. This is not a small update, it's actually a seismic shift in how your business is evaluated. For the first time, even transactions that do not result in chargebacks can count against you. And if you're not tracking the right metrics, you could lose your ability to process payments without warning. Here's what you need to know to protect your business before enforcement kicks in in October. What is VAMP? VAMP stands for Visa Acquirer Monitoring Program. It launched in April of 2025, but the enforcement period for this new program has been extended to October 1st, 2025 to give merchants a little bit more time to prepare. The new VAMP program actually replaces two of Visa's older programs for monitoring fraud and chargebacks. The old ones are called the Visa Fraud Monitoring program and the Visa Dispute Monitoring program. As of June 1st, Visa's VAMP system is now going to calculate the fraud ratio by combining all TC40s, which are the reported fraud, and all chargebacks, even if they're resolved. Only refunds made before a chargeback through RDR are excluded. So both fraud and non-fraud related chargebacks are combined into a single metric. So what What is a TC40 report? A TC40 report is a fraud report sent by the cardholder's bank or the issuing bank to Visa whenever a transaction is flagged as fraud. This can happen in several real-world situations, such as a buyer or a customer makes a legit purchase but then contacts their bank claiming that it was unauthorized. I'm sure many merchants are familiar with this. It's actually called friendly fraud. fraud. Another example would be someone takes stolen credit card information and uses it to make a purchase. Or a cardholder maybe doesn't recognize the business name on their credit card statement and reports the transaction as fraudulent. In each of these cases, the issuer can send a TC40 report, even if no chargeback is filed. And those TC40 reports are now a new metric that merchants need to monitor not just chargebacks anymore, but also these TC40 reports. Visa then takes the report and passes it along to the merchant's bank. So it may or may not lead to a chargeback, but it still marks the transaction as fraudulent and thus it counts towards your fraud ratio. TC40s have actually been around for years, but they were previously mostly used in just the Visa fraud monitoring program. Under Visa's new program, VAMP, these fraud flags are now counted in your fraud rate, even if you refunded the transaction or no chargeback occurred. This is especially relevant for those friendly fraud cases that we discussed earlier where a customer falsely claims that they didn't authorize the transaction. Why is this important? Why should merchants care? Before VAMP, many merchants flew right under the radar especially if their chargebacks were minimal. Now, even if you have minimal chargebacks, TC40 reports could push you over the limit to be monitored by Visa. If your fraud ratio is over 1.5%, you could get fined from Visa. And to make matters worse, starting in January 2026, the threshold drops to 0.9%. So that's less than 1% fraud ratio. So not only do you have your chargeback ratio to worry about, but now added to that chargeback ratio is the fraud TC40 reports. And so you're getting, you're having both of those metrics combined and you're being held to a higher standard or a lower threshold to be monitored by the card brands. So the pressure is getting ramped up on merchants and on acquirers. Acquiring banks actually have even stricter thresholds under this new VAMP program. Visa requires that these acquiring banks across all of their merchants have a fraud ratio of 0.5% or lower. So the banks are under even more pressure to ensure that they don't have merchants in their portfolio who are pushing that fraud ratio higher. A lot of times these acquiring banks are going going to terminate merchant accounts before Visa gets involved or forces them to take action. We're actually anticipating up to 250,000 merchant accounts getting terminated by the end of 2025 as a result of this new VAMP program. These are merchants who would be fine under the current rules, but with these new stricter rules, there's no way that they're going to be able to keep their merchant accounts alive based on the amount of fraud and their fraud ratios that are coming through. Under VAMP, there is a new formula and metric that is now going to be monitored by the card brands and your acquiring bank. It's called a fraud ratio. And to calculate the fraud ratio, you're now going to take your chargebacks plus the TC40 fraud reports, combine that number and divide it by the total number of transactions per month. That is your fraud ratio. The good news is, is that RDR or rapid dispute resolution, any transactions that are refunded from that are excluded from your chargeback account. But the TC40 from that dispute is still going to count towards your fraud rate. So for example, if you refund a customer early to avoid their inquiry becoming a chargeback, you still get hit with a fraud report. port, a TC40, even if it does not become a full chargeback. Let's talk about who is going to be affected by this new vamp guidelines and the new vamp program. First of all, literally every merchant is now affected by this. This is a seismic shift in how the card brands are looking at fraud and monitoring merchants and banks. So they're really holding acquirers and merchants to a new standard to ensure that whatever it is that they're selling and however they're selling it is not resulting in cardholders complaining about fraud. So any business who might not have their marketing perfect, for example, like ads that might overpromise things or might attract the wrong type of buyer who later will claim that it was a fraudulent transaction, they're going to be very impacted by this. Any merchants that offer a poor customer experience will likely get impacted by getting complaints of fraud or any merchant who doesn't have fraud tools enabled on their accounts will be affected. And remember, the acquiring banks have even tighter thresholds than merchants. The acquiring banks are expected to keep their total fraud ratio below 0.5%. So they are incentivized to monitor all of the merchants in their portfolio and they're going to probably kick out anyone who is running a little too hot. Let's talk about how merchants can prepare for the new Visa VAMP guidelines. Very first thing is you still need to monitor your chargebacks. These are visible in most of your merchant account dashboards from your processor. However, you also need to monitor TC40 reports and those are not on your statement and they're not in the bank portals, at least at this point. So So the way that you can see this TC40 data is typically through a specialized platform like our pay diverse vamp monitoring tool. That's why working with a partner who can track both of those metrics, the TC40s and the chargebacks is essential. It's also really important that you monitor and keep an eye on your settled transaction volume each month. You want to make sure that you're receiving all of the funds and that you're not getting a lot of chargebacks. If you ever notice that your account has not been funded by your bank, that is a red flag that something could be wrong and you need to check in with the bank immediately and see if you've been flagged for high risk or some sort of issue. We recommend that all merchants use dispute alerts and real-time data sharing and any sort of proactive fraud controls. Our PayDivers VAMP monitoring tool gives you full visibility into your TC40s and your chargebacks We'll see you next time.