How to Reduce Your VAMP Ratio

The Visa Acquirer Monitoring Program (VAMP) will soon move from policy to practice, with enforcement beginning October 1, 2025. Merchants that have been waiting to address their VAMP ratios are running out of time. Once enforcement begins, exceeding Visa’s limits can trigger significant financial consequences.

The safest position is to keep VAMP ratios well below Visa’s ceiling, giving room for normal fluctuations without crossing the line. Doing that requires more than basic chargeback handling—it calls for a comprehensive chargeback prevention and management strategy. Merchants that start implementing these measures today will be far better prepared when enforcement arrives.

Understanding VAMP

Visa’s VAMP replaces the older dual-system approach by consolidating fraud and chargeback monitoring into a single program. The new VAMP ratio is calculated monthly based on a merchant’s card-not-present transactions. The basic formula is as follows:

(Reported Fraudulent Transactions + Total Disputes) ÷ Total Settled Transactions

One of the most significant factors impacting the VAMP ratio is how fraud is counted. Issuers submit TC40 fraud reports when a customer reports a transaction as unauthorized. If issuer also follows through with a chargeback, the same transaction is essentially counted twice—once as a dispute and once as a fraud report.

This double-counting effect means even if nothing has changed for your business, your VAMP ratio will be higher than your dispute ratio was. Visa has set more relaxed requirements for merchants to compensate for this, but many businesses will still have greater difficulty maintaining compliance under the new system.

Initially, merchants will only face enforcement if their VAMP ratio exceeds 2.2%. However, that threshold drops to 1.5% on April 1, 2026. Acquirers will face pressure even sooner: starting January 1, 2026, their portfolios must stay below 0.5%. To protect themselves, some acquirers will demand their merchants maintain VAMP ratios that are even lower than what Visa requires.

If a merchant exceeds the defined thresholds, Visa will impose a fee of $8 per fraudulent or disputed transaction after a three-month grace period has elapsed. That grace period applies only to first-time offenders in any 12-month period.

Given the significant consequences of a high VAMP ratio, let’s go through some of the tools available to merchants to reduce their ratios and stay clear of penalties.

Chargeback Prevention Alerts: Verifi CDRN and Ethoca

One of the most effective ways to prevent disputes from reaching Visa’s system is to intercept them early through chargeback prevention alerts. Both Verifi’s Cardholder Dispute Resolution Network (CDRN) and Ethoca Alerts serve this function by pausing incoming disputes before they’re formally submitted and notifying merchants.

When a customer disputes a transaction, issuers participating in these alert networks send an alert to the merchant before filing a chargeback. That gives the merchant up to 72 hours to resolve the issue, typically by issuing a refund. If resolved in time, the chargeback is never filed.

Verifi CDRN is directly affiliated with Visa, while Ethoca is owned by Mastercard. However, Ethoca’s issuer network includes many banks that issue Visa cards as well. Merchants that enroll in both systems gain broader coverage and better protection against disputes across all networks.

These alerts can help merchants avoid a dispute entering Visa’s system and, depending on the issuer, may also prevent a TC40 fraud report from being filed. While not guaranteed, avoiding the dispute often reduces the likelihood of a fraud report.

To make the most of this solution, merchants should consider working with a company like Chargeback Gurus that can handle alert responses 24/7 and can consolidate multiple alert streams into a unified reporting and analytics dashboard.

Order Insight

While alerts focus refunding potential chargebacks, Order Insight helps prevent disputes by resolving cardholder confusion at the source. It gives issuing banks access to enhanced transaction details when customers inquire about charges on their accounts.

If the issuer and the merchant are enrolled in Order Insight, customers and bank representatives can view digital receipts and other purchase information instantly when inquiring about a transaction. This often prevents accidental disputes caused by unrecognized or forgotten purchases.

Order Insight requires integration with Visa’s system and the ability to push detailed order information in real time. When implemented correctly, it can keep a dispute from being filed at all, which also prevents a TC40 report being triggered.

To optimize this tool’s effectiveness, merchants should:

• Use a billing descriptor that customers will recognize.
• Give the system access to as much relevant purchase information as possible.
• Work with a provider that can assist with integration and ongoing data quality improvements.

Rapid Dispute Resolution (RDR)

Another option for keeping disputes out of the VAMP calculation is Visa’s RDR platform. This system allows merchants to pre-authorize refunds based on predefined rules. When an eligible dispute is submitted, the system automatically resolves it by issuing a refund without the merchant needing to take further action.

Disputes resolved through RDR are not counted in the VAMP ratio. However, if the issuer submits a fraud report for the same transaction, that TC40 will still count.

To use RDR strategically, merchants should:

• Set rules to automatically refund low-value or low-winnability transactions.
• Avoid refunding chargebacks they are confident they could successfully dispute.
• Monitor performance metrics regularly to fine-tune the refund criteria.
• Partner with a chargeback management provider that can analyze patterns and optimize refund thresholds.

Visa Compelling Evidence 3.0

For merchants with frequent repeat customers or those who use recurring billing heavily, Visa Compelling Evidence 3.0 (CE3.0) provides a structured path to prove that a transaction was legitimate. This system allows merchants to present standardized transaction info that proves the absence of third-party fraud.

When successfully used, CE3.0 prevents both the dispute and the TC40 report from being included in the VAMP ratio calculation.

To qualify, merchants must submit two previous transactions that are between 120 and 365 days old. The transactions must also have matching information that meets one of the following criteria:

• Both the device ID/fingerprint and the IP address
  
  OR
• One of those data points plus either the shipping address or the user ID

Visa CE3.0 can be used pre-dispute by merchants enrolled in Order Insight, or post-dispute by any merchant.

Additional Risk Management Strategies

While the tools described above target disputes already in motion, there are also additional strategies that can prevent fraud and disputes at the source, thereby reducing VAMP ratios.

Machine learning-based fraud prevention tools can detect unusual behavior patterns, identify card testing attempts, and flag risky transactions before authorization. Adding 3-D Secure 2.0 to the checkout process provides a layer of issuer-backed authentication that can shift liability and reduce the risk of disputes.

Operational changes can also make a difference. Clear policies for billing, refunds, cancellations, and recurring charges help set customer expectations and reduce misunderstandings. Training customer service teams to respond to inquiries and resolve issues promptly can prevent chargebacks initiated out of frustration or confusion.

Merchants should also review dispute and fraud data to identify trends and recurring issues. Patterns in refund requests, unauthorized charge claims, or chargebacks can indicate where processes need adjustment. Working with chargeback management specialists that can consolidate data across disparate systems, conduct advanced analytics, and provide actionable insights can help uncover hidden problems that are leading to disputes.

Stay Ahead or Risk Falling Behind

By combining fraud reports and disputes into a single ratio, Visa has made it more difficult for many merchants to stay compliant using reactive methods alone.

Proactive measures such as chargeback prevention alerts, Order Insight, RDR, and CE 3.0 can significantly reduce the number of fraud reports and chargebacks contributing to your VAMP ratios.

As acquirers begin enforcing their own internal thresholds to protect themselves, merchants with high VAMP ratios may find themselves under increased pressure, even if they remain under Visa’s limits. But merchants who implement prevention strategies and adjust their operations before enforcement begins will be in a far better position to maintain compliance and avoid unnecessary costs.