The Dispute Monitoring Program is Visa’s version of discipline and consequence for merchants who exceed the chargeback thresholds they deem as acceptable. If merchants aren’t careful, they can ultimately end up in a permanent timeout.
The threshold is calculated as the number of chargebacks and the dollar volume as a percentage of the merchant’s total sales volume.
There are different consequences for each level. At the early warning threshold, they just keep a watchful eye. At the standard level, merchants are given a grace period, but then hit with additional per-item chargeback fees. At the excessive level, the per-item fee hits immediately and Visa can exercise the right to terminate the merchant’s account, banning them completely from accepting Visa payments.
There’s a similar program to monitor the thresholds of chargebacks for the specific reason of fraud. The penalties are a harsh flat fee. After a few months in the standard program, merchants are charged $25,000 monthly while the excessive program will run $10,000 in the first few months, then $25,000, and increases from there.
Acquirers (the financial institutions that maintain a merchant’s account in order to accept credit cards) have their own thresholds. If their ratios fall above the thresholds, they can wind up in the Visa Acquirer Monitoring Program. Again, the purpose is to identify acquirers whose portfolios generate excessive disputes or fraud in an effort to help reduce dispute/fraud activity. The important distinction is that here, Visa is measuring against their thresholds for a group of merchants, whereas above they are measuring for individual merchants.
If a processor is wanting to terminate a merchant account, citing chargebacks, but it doesn’t seem logical given your activity, it could be that they are trying to clean up their portfolio as a whole, and you happen to be lumped in with some other problem children.
Knowledgeable ISOs can connect merchants with the tools and resources to reduce their chargebacks.
If you need help connecting with these resources, please reach out to us at firstname.lastname@example.org.