VAMP: What it means in reality and why

PART ONE

Hi there,

It's been a few months since Visa's new Acquirer Monitoring Program (VAMP) officially launched, and the dust is beginning to settle. In this 2-part newsletter, I’m going to look at what VAMP actually means on the ground and how it will affect you.

Those of you who work in payment processing will realize by now that VAMP isn't just a slick new acronym—it's a major shift in accountability. The old system, with its separate Visa Dispute Monitoring Program (VDMP) and Visa Fraud Monitoring Program (VFMP), treated fraud and disputes as distinct issues. The new VAMP program, however, consolidates everything into a single metric—with the new "VAMP Ratio" combining fraud-related transaction reports (TC40s) and non-fraud disputes into one number.

Keeping things simple

On the surface, this might seem like a welcome simplification—one number is easier to track than two, right? But for acquirers, this simplification is a major problem. The responsibility for a merchant's entire dispute performance now falls squarely on the acquirer's shoulders. A single, high-risk merchant can now push an entire portfolio over the threshold, even if the rest of the merchants are performing just fine. This collective exposure means that acquiring banks can no longer simply absorb the risk of a handful of problematic merchants.

This shift in responsibility also comes with tighter thresholds and steeper financial penalties. As of the initial rollout, acquirers with an "Excessive" VAMP ratio face fines of up to $10 per fraudulent or disputed transaction. It’s a major increase in financial risk for the acquirer, and it’s a safe bet they’ll be looking to pass those costs on to merchants. What’s more, the penalty framework is no longer just about the dollar amount of fraud, but the transaction count, which puts the spotlight on enumeration attacks and other low-value, high-volume card testing.

A wake-up call for acquirers

This new reality forces acquiring banks to do what they’ve historically done their very best to avoid—actively manage their merchant portfolios. For acquirers, the days of simply boarding a merchant and hoping for the best are over, with their old "wait-and-see" approach (which isn’t exactly a work of business genius) just not cutting it anymore. Success in this new environment will depend on transparency, collaboration, and a bucket-load of analytics tech to help acquirers spot any problematic merchants.

Right, so we know now how VAMP is affecting acquirers. But how is it going to affect you, the merchant? In part 2 of my “must-see, summer blockbuster” newsletter, I’ll dig into that subject for you.

Until next time,

Joe Zahaitis

Payment Processing Consultant