Beyond VAMP: what the surge in disputes means for merchant payment strategies

 

Jordan Graison, the Founder of Spill the Tea on Payments, breaks down what the surge in VAMP-related disputes means for merchants. 

The newly launched VAMP (Visa Acquirer Monitoring Programme) has sparked intense conversations in the payment community. The recent full enforcement of the programme affects acquirers and merchants way more than before, and it casts a harsh light on an issue that merchants underestimate: the impact of fraud and chargebacks.

A structural change to a growing threat

VAMP streamlines dispute fighting by reducing 38 distinct remediation processes into a single one. It has phased out two older programmes – the Visa Dispute Monitoring Programme (VDMP) and the Visa Fraud Monitoring Programme (VFMP). The objective is to simplify and mitigate the cost of disputes for the whole ecosystem. According to Visa, American cardholders disputed USD 11 billion in 2024, representing a 52% increase compared to 2019, pre-COVID.

Merchants' low engagement raises concerns

Merchants still don't take the subject of chargebacks seriously. In its Chargeback Pulse 2023 guide, Justt reports that among 523 participants, 12% of businesses earning more than USD 500 million did not contest chargebacks at all. The numbers go up to 20% for businesses earning between USD 50 to 500 million. These figures are alarming if we consider how impactful chargebacks can be for a company accepting card payments. 

The possibility to dispute charges and request chargebacks is one of the features that makes Visa and Mastercard remarkable and appealing to consumers. Cardholders get the feeling of being treated fairly and impartially. 

One system, many rules: a fragmented monitoring landscape

Now that we've said all that, how can we ensure that every party understands and properly executes the chargeback and dispute process? 

Card schemes use a set of rates to monitor merchants' activities, but merchants often struggle to understand how to calculate them. The newly designed VAMP has created even more confusion. But what are the actual consequences of a high fraud or dispute rate for their payment activity? 

Visa and Mastercard have different programmes for monitoring disputes and fraud: 

• For Visa, the VAMP programme only applies to online transactions. Visa monitors disputes and fraud according to the same process, under newly enforced rules with updated calculation methods and penalties. 
• For Mastercard, there are two programmes: the ECP (Excessive Chargeback Programme) for disputes and the EFM (Excessive Fraud Merchants) for fraud. The ECP only monitors card-present transactions, and the EFM monitors card-present and card-not-present transactions.

Orchestration and multi-acquiring complicate accountability

Several factors exacerbate the issue of tracking and monitoring disputes. More and more merchants work with multiple acquirers and use payment orchestration platforms, which complicates the relationships involved in the process. As a result, merchants struggle to understand who holds the contractual relationship, and therefore to whom they must justify performance metrics. To make matters worse, the acquirers and the schemes don't share that information. 

However, the consequence of a high fraud or dispute rate already impacts merchants. Without any way to remediation, it has a devastating cost, which many of them overlook.

Schemes sanction acquirers, but merchants feel the heat

Merchants must keep one single clear compass: their acquirers. Visa and Mastercard hold no relationships with merchants in the traditional four-party model. Issuers contractualise with cardholders, while acquirers contractualise with merchants to settle funds. 

The card schemes monitor performance based on each acquirer-merchant relationship. Therefore, the game is played at the acquirer level for any scheme’s programmes. If merchants work with multiple acquirers, their rates will vary depending on the activity of each acquirer. The schemes calculate merchants' rates differently, and according to which programmes they fall into. 

In the overall process, the schemes sanction the acquirers, not the merchants, for not respecting the thresholds. Acquirers are accountable for their actions to the schemes. According to article 10.4.1.1 of the Visa rules: ‘An acquirer must investigate a merchant outlet that appears on an exception report within seven days’. 

Schemes issue reports for excessive disputes or fraud, which acquirers must ensure they respect. Non-compliance with the VAMP programme can cost up to USD 100.000 per month (as per article 12.5.3.1 of the Visa rules). Schemes invoice all fees to acquirers, not to merchants. 

What is certain, however, is that merchants must show goodwill to fight disputes and monitor their activities. If they qualify for monitoring programmes, the schemes and their members ask for written commitments. They then track the situation over several months until it is back under control. If merchants refuse or fail to comply with the rules, they risk exclusion from the scheme’s network.

Reputation is not reset by switching providers

Merchants could argue that, by leveraging a multi-PSP strategy, they can redirect transactions to another acquirer or a payment facilitator (PayFac). However, the schemes have anticipated this. Once a merchant is flagged in a monitoring programme, they will stay in the programme until their situation resolves. It is also important to note that acquirers can also refuse to onboard such merchants. Visa and Mastercard maintain a specific database of high-dispute merchants, which acquirers and their PayFacs must check before onboarding any customers.

Acquirers can choose to take on the risk, but will surely penalise the merchant and ask for more stringent financial conditions. Even more so, if they see that the merchant has repeatedly exceeded the thresholds or has been under monitoring for fraud or disputes, acquirers will ask for the history of chargebacks and fraud, as they don’t want to run the risk of sanctions from schemes.  

Also, merchants should never forget that even if the acquirer decides to onboard them, the acceptance rate will probably be lower than expected. Issuers will flag their profiles as being problematic and refuse to honour transactions. This creates a chain reaction that can further impact a merchant’s business. 

Schemes and their members have a strong contractual commitment to maintain the integrity of their networks by any means necessary. This is also a question of credibility for cardholders – after all, who would trust a card scheme known to be a haven for fraud?

Beyond compliance: the strategic imperative of dispute management

So now that we’ve painted the bigger picture, what can merchants do?

• Before investing and rushing to the first provider to fight disputes, have a dedicated strategy. This will also support your multi-PSP approach, as acceptance and acquiring are both linked. It will also provide valuable insight into the efficiency of your PSPs – after all, why multiply PSPs if you cannot follow the dispute activity of one?
• Choose your partners wisely. Dispute managers are unequally present, don’t listen to those t promise the same process with all acquirers in any region. Always remember that the disputes are between acquirers and schemes; dispute managers only make the process clearer. True efficiency comes from you and your capacity to address fraud and disputes directly. 
• Disputes come in different shapes, depending on regions and card types. Europeans tend to dispute less, Brazilians more. Credit cards are more disputed than debit cards. 
• Address all complaints through your customer care, as each one could potentially become a dispute that you can prevent.
• Respond to all the cases presented by your acquirers, and more importantly, be proactive. Some acquirers will not follow up with you, so you must chase them to ensure the activity is on track. If you have regular meetings with your account manager from the acquirer side, ask for detailed reports on dispute activities, as it will prevent any misunderstanding. 
• Also, keep in mind that disputes require educating your teams and your customers, and this will probably expose some blind spots in your processes. 

About the author

Jordan Graison is a payments consultant and content creator with experience across the full value chain, from paytech startups to players like Worldpay and MoneyGram. He’s worked in ops, partnerships, and strategy, and led sales at Limonetik. As the founder of Spill the Tea on Payments, he helps companies navigate complexity, grow with clarity, and build narratives that reflect who they are, not just what the market expects.

 

About Spill the Tea on Payments 

Spill the Tea on Payments is a content platform exploring the blind spots, tensions, and power plays in the payments industry. Through content and consulting, it helps companies and independents shape real, memorable narratives, not just noise. From strategic positioning to content creation, it’s for those who want to sound like themselves, not like everyone else.