Beginning October 1, 2019 Visa is lowering their dispute-to-transaction ratio and is also lowering the threshold for fraud-to-sales ratio. While these new standards have not yet been announced to the public, Visa has informed the merchant acquiring community.
Today, for low-risk merchants, you will find yourself on Visa’s Chargeback Monitoring Program with a 1% ratio of sales-to-transactions and more than 100 chargeback disputes in a given month. This ratio will change to 0.9% after October 1, 2019. For high-risk merchants this ratio will lower from 2% to 1.8%. In both cases the total number of disputes in a given month will remain the same. But, the fraud-to-sales ratios will also be changing from 1% to 0.9% for low-risk and from 2% to 1.8% for high-risk.
Why is this such a big deal? If you end up on Visa’s Chargeback Monitoring Program you may find it super difficult to get off. Visa will give you a 3-month cure period to address your excessive chargebacks, that is after you provide a detailed plan, which in and of itself can be a drain on your resources. If you do not materially reduce your chargeback disputes, you will likely have your merchant account closed, or even worse, you could end up on the MATCH List (Terminated Merchant File). Any principles (the underwritten individuals who own and operate your business) who end up on the MATCH List will find it nearly impossible to get another merchant account for up to 5-years. This often means the end of your company or business.
So, what can you do? The best defense is a good offense. Your best strategic move to fight chargebacks will always be through your customer service department and customer handling. This is where you can make the largest impact. If your business is experiencing high chargebacks you should evaluate your return policies and your customer service experience. Treat your customer like a king and they will return the favor over and over.
If you would like help with chargebacks, or would just like to explore your online fraud strategy with us, feel free to contact us at firstname.lastname@example.org or call us at +1-800-421-7898.