VAMP stands for Visa Acquirer Monitoring Program

Navigating Visa’s VAMP: Rethinking High-Risk Merchant Processing in the EU

The landscape of high-risk merchant processing is experiencing a seismic shift with Visa’s rollout of the Visa Acquirer Monitoring Program (VAMP), set to fully enforce stringent thresholds by 2026. Historically, EU banks have been a favored solution for cross-border merchants, particularly in high-risk sectors such as online gaming, gambling, cryptocurrency trading, nutraceuticals, and subscription-based services. These banks offered not only a favorable regulatory environment but also specialized solutions for managing card-not-present (CNP) transactions. However, the advent of VAMP changes this significantly.

Understanding VAMP and its Implications

The Visa Acquirer Monitoring Program consolidates chargeback and fraud monitoring into a single, stringent metric known as the “VAMP Ratio.” Initially, merchants face thresholds of 1.5%, but these rapidly decline to 0.9% by January 2026. Acquirers face an even steeper challenge, with thresholds tightening dramatically from 1% to just 0.3%. These reduced limits force acquirers—particularly those in the EU—to reassess their appetite for risk, inevitably influencing their relationships with high-risk merchants.

Why EU Banks are Particularly Vulnerable

For many years, EU banks have thrived by accommodating high-risk merchants processing cross-border transactions, capitalizing on their willingness to handle complexities that other markets often avoid. The introduction of VAMP significantly disrupts this model. Under the new program, acquirers are financially penalized for each transaction exceeding the defined thresholds, potentially incurring fines of up to $10 per dispute. Consequently, EU banks must now either drastically reduce their exposure to risk or risk severe financial consequences.

This development presents a two-fold challenge: first, banks must tighten merchant underwriting, possibly terminating long-standing merchant relationships or substantially increasing reserve requirements. Second, given that many high-risk cross-border merchants see higher instances of disputes—especially from US-issued cards—their presence becomes even riskier under these new rules.

US Cards: The Main Source of Challenges

The underlying concern is compounded by transaction traffic originating from US-issued credit and debit cards. Data consistently shows US cards as significant contributors to global fraud and chargeback volumes. Factors exacerbating this include low adoption rates of Verified by Visa (VbV) and 3D Secure protocols in the US market and a culture among US card issuers that is quick to initiate chargebacks, often without extensive preliminary merchant engagement.

Thus, EU banks processing significant US card volumes face heightened scrutiny under VAMP. The reduced tolerance for chargebacks and fraud translates to higher operational costs and increased risk exposure for these banks.

Here’s a breakdown of what VAMP is and its key aspects:

What VAMP Does:

• Consolidates Existing Programs: VAMP officially replaces several older monitoring programs, including the Visa Dispute Monitoring Program (VDMP) and the Visa Fraud Monitoring Program (VFMP), into a single, unified framework. This aims to simplify compliance and provide a more comprehensive view of risk. 
• Monitors Fraud and Disputes: The primary goal is to continuously monitor transaction activities to detect and prevent fraudulent behavior, ensuring trust in the system for both merchants and consumers.
• Focuses on Acquirers and Merchants: VAMP holds both acquirers (the banks that process payments for merchants) and merchants accountable for their fraud and dispute rates.
• Introduces the “VAMP Ratio”: This is a new metric that combines reported fraudulent transactions (TC40 data) and non-fraud disputes (including specific reason codes like 11, 12, and 13, or TC15 messages) into a single calculation. This ratio is then divided by the total number of settled card-not-present (CNP) transactions.
• Addresses Enumeration Attacks: VAMP also introduces a separate “enumeration ratio” to track card testing fraud, where fraudsters attempt to validate stolen card details by running small, rapid transactions. Visa’s Account Attack Intelligence (VAAI) system helps identify these attempts.
• Sets Stricter Thresholds: VAMP has updated and, in many cases, tightened the acceptable thresholds for fraud and dispute ratios for both merchants and acquirers. Exceeding these limits can lead to penalties.
• Emphasizes Proactive Risk Management: Visa is shifting from a reactive “outlier management” approach to a “lifecycle risk management” approach, encouraging earlier detection and prevention of issues.
  
   

Why VAMP Matters (Especially for Merchants):

• Enhanced Fraud Detection: VAMP aims to improve Visa’s ability to detect and prevent fraud globally.
  
   
• Consistent Standards: By aligning regional standards, VAMP ensures a uniform level of security and reliability across the Visa network.
  
   
• Penalties for Non-Compliance: If an acquirer or merchant fails to meet VAMP standards, they can face significant penalties, including fines. Acquirers often pass these fines on to merchants.
   
• Increased Scrutiny: Businesses with high VAMP ratios will face increased monitoring and may need to implement stricter fraud prevention and dispute resolution measures.
  
   
• Importance of Collaboration: Merchants need to work closely with their acquirers to understand VAMP requirements, monitor their ratios, and implement effective strategies to stay compliant.

Key Changes and Timelines:

• Effective Date: The evolved VAMP program officially went into effect on April 1, 2025.
• Advisory Period: There was an advisory period until September 30, 2025, during which businesses exceeding thresholds received notifications and guidance instead of immediate penalties.
  
   
• Stricter Thresholds in 2026: Even tighter thresholds for VAMP ratios are expected to be imposed starting January 1, 2026.

Mastercard’s Approach and Considerations

Similar to Visa’s VAMP, Mastercard employs rigorous monitoring programs such as the Mastercard Excessive Chargeback Program (ECP) and Mastercard Fraud Monitoring Program (FMP). These programs similarly enforce stringent thresholds and penalties for acquirers and merchants surpassing set limits. Mastercard’s enforcement of these thresholds creates parallel pressure on EU banks and high-risk merchants. Ensuring compliance with both major card networks further compounds the operational complexity and underscores the need for comprehensive risk management strategies.

Strategically Pivoting: The Way Forward

Given these developments, high-risk merchants and payment processors must rethink their acquiring strategies. Here are some potential solutions:

1. Diversification of Acquirer Relationships: Shifting dependence away from EU banks towards acquiring banks in other regions—such as Asia-Pacific, Latin America, and North America—is crucial. Each region offers unique risk appetites and regulatory frameworks that might align better under the new VAMP thresholds.
2. Robust Fraud Prevention Technologies: Adoption of advanced AI-driven fraud detection and mitigation technologies is no longer optional but mandatory. Solutions such as real-time transaction monitoring, geolocation tracking, and behavior analytics can substantially lower fraud and dispute occurrences.
3. Enhanced Authentication Measures: Actively promoting and incentivizing the adoption of 3D Secure, VbV, and EMV-based verification methods can significantly reduce instances of friendly fraud and chargebacks, particularly from high-risk regions like the US.
4. Smart Transaction Routing: Leveraging technology to dynamically route transactions based on risk profiles, geographical origin, and real-time fraud analytics can optimize processing approval rates while minimizing exposure to disputes.
5. Merchant Education and Compliance: Merchants must be made fully aware of new thresholds and encouraged to adopt best practices proactively. Regular workshops and clear communication of compliance expectations can mitigate risk significantly.

Frequently Asked Questions (FAQ)

What is Visa’s VAMP? VAMP is Visa’s new monitoring framework combining fraud and chargeback rates into a single metric, targeting card-not-present transactions.

How does VAMP affect EU banks? EU banks face stricter compliance requirements, increased risk management obligations, and financial penalties if they exceed thresholds, prompting reduced risk tolerance.

Why are US cards problematic for EU banks? US-issued cards frequently lack robust authentication measures (like VbV and 3D Secure), and US issuers commonly initiate chargebacks swiftly, creating elevated dispute risks.

What alternatives should high-risk merchants consider? Merchants should consider diversifying acquiring relationships globally, enhancing authentication protocols, and leveraging advanced fraud-prevention technology.

What tools help reduce fraud and disputes? Solutions like real-time fraud analytics (Kount, Forter, Cybersource), advanced authentication methods (3D Secure), and transaction routing technologies can help mitigate risks.

Conclusion and Next Steps

Visa’s VAMP undoubtedly presents challenges for high-risk merchant processing, particularly within the EU, where banks are likely to reconsider their portfolios significantly. This shift forces payment processors, merchants, and banks to rethink and upgrade their risk management strategies fundamentally.

Looking forward, successful navigation of this new environment depends upon early adoption of innovative risk management strategies, diversification of banking partnerships, and leveraging technology to mitigate disputes proactively. Adapting now positions businesses to not only survive but thrive in the emerging payments landscape shaped by stringent programs like VAMP.

Recommended Reading:

• Visa VAMP Overview Visa Official
• Mastercard Chargeback Programs Mastercard Official
• European Payments Council: Cross-border Risk Management EPC
• Chargeback Gurus: Merchant Risk Management Resources Chargeback Gurus

eDataPay Media Team

www.edatapay.com

1-561-395-9554