What Are Merchant Monitoring Programs?
One of the primary responsibilities of global card networks is to make transactions safe for every user. Merchant monitoring programs are the tools that help global payment networks with this task by tracking sellers' activity. In this article, we explore the functions of the monitoring programs, explain how they work, and give practical advice on how to avoid falling under the monitoring program as an e-commerce seller.
Why Do Merchant Monitoring Programs Exist?
Payment networks, like Visa and Mastercard, have established Merchant Risk Monitoring Programs to ensure a secure global payment ecosystem. These programs are vital for protecting the interests of consumers, financial institutions, and payment networks.
There are several problems that such programs can help with, including the following:
- Ensuring compliance with network rules. Making sure all merchants comply with network security, data protection, and dispute resolution standards builds a secure experience for all users, preventing financial losses for cardholders, merchants, and acquirers
- Controlling fraud and chargebacks. Preventing fraud and excessive chargebacks is vital to maintaining consumer confidence, protecting acquiring companies' revenue, and ensuring the widespread use of card payments. This helps the entire payment ecosystem remain reliable.
- Maintaining brand reputation. Upholding a reputation for secure transactions is essential for Visa and Mastercard's global brand. Monitoring helps prevent associations with high-risk merchants that could destabilize the image and reduce the brand trust, resulting in elevated customer churn.
- Identifying and assisting high-risk merchants. These programs can identify merchants needing guidance or support in improving their risk management, helping them become more sustainable businesses.
- Motivating merchants to improve their performance. Payment processors usually suspend unreliable merchant partners to avoid reputational damage. However, merchant monitoring programs allow sellers to prove their trustworthiness by improving their work ethics, pushing progress with penalty fees.
As a rule, different programs deal with separate issues, helping payment networks to resolve any issues effectively. For instance, Mastercard has two solutions — one for managing fraud and another for dealing with chargebacks. A seller can simultaneously fall under several merchant monitoring programs if their performance is lacking in multiple areas. Below, we explore the programs active within Mastercard and Visa and explain how they work.
Mastercard Merchant Monitoring Programs
Mastercard uses two monitoring programs to safeguard transactions and uphold the brand’s image: ECP (Excessive Chargeback Program) and EFP (Excessive Fraud Program). These programs are designed to assist merchants in controlling their chargeback and fraud risks. Below, we explore the intricacies of their work.
Mastercard ECP
The Mastercard Excessive Chargeback Program (ECP) is a compliance tool designed to monitor and prevent excessive chargebacks on the Mastercard network from e-commerce merchants. Non-compliant merchants face penalties. Monitoring began in November 2019, with evaluations starting in May 2020, based on the previous month's chargeback volume. The ECP threshold is defined by two factors: a chargeback ratio of 1.5% and a volume of 100 monthly chargebacks.
Mastercard EFM
The purpose of the Mastercard Excessive Fraud Merchant (EFM) program is to monitor e-commerce merchants and help prevent excessive fraud within the Mastercard network. Merchants entering the EFM program must develop a fraud management strategy and face penalties (potentially including the termination of merchant accounts) for non-compliance. To enroll in the EFM program, a merchant must have monthly fraud losses totaling $50,000 or more, account for 0.5% or more of their sales value in fraud, and process a minimum of 1,000 monthly transactions.
Visa Merchant Monitoring Programs
Before 2025, Visa monitored sellers’ activity with three independent programs. The list includes VDMP (Visa Dispute Monitoring Program), VFMP (Visa Fraud Monitoring Program), and VAMP (Visa Acquiring Monitoring Program). However, VDMP and VFMP will be discontinued in October 2025, with their functions moving to an enhanced Visa Acquiring Monitoring Program.
Visa Acquiring Monitoring Program
The Visa Acquirer Monitoring Program (VAMP) is a unified program that monitors merchants' performance in managing fraud and chargebacks. Starting in October 2025, the chargeback threshold for VAMP enrollment will be 1.5%, decreasing to 0.9% in January 2026. Exceeding these limits will result in VAMP enrollment, leading to fees and penalties. Fortunately, resolved non-fraud disputes won’t be included in the VAMP ratio; however, it only works if disputes were settled through Visa tools, such as Compelling Evidence 3.0. Such strict rules pose a serious threat to high-risk businesses, like gambling or dating, but there are some rumors that Visa might reconsider these terms.
Another factor that can contribute to VAMP enrollment is a high enumeration ratio — sellers with over 20% of their submitted transactions flagged as enumeration attempts will risk falling under the monitoring program. Merchants will be given a 3-month grace period to improve their performance before the penalty fees will be applied. To exit the program, sellers must return VAMP and enumeration ratios under allowed thresholds.
How to Avoid Falling Under the Monitoring Program?
While exiting monitoring programs is possible, fines applied to the merchants who fall under such programs can cause significant financial damage. Here, we list proactive steps the sellers can take to avoid falling under VAMP, ECP, or EFM.
- Implement chargeback prevention tools. Services like Verifi and Ethoca, available within MidArmor, can help merchants manage chargeback disputes automatically. These chargeback alerts allow merchants to settle disputes before the chargeback reaches a financial institution, which helps to keep the CTR low and avoid enrollment in monitoring programs.
- Install CRM software. Increasing customer satisfaction is an excellent strategy for minimizing legitimate chargebacks. Implement a CRM system to enhance the clients’ experience and support a healthy customer-company relationship to prevent chargeback disputes.
- Blacklist аraudsters. While more customers means more profit, cutting off clients that proved unreliable is essential to secure the revenue. Blacklist users who repeatedly issued chargebacks to stay under the allowed chargeback and fraud thresholds.
- Choose a reliable shipping partner. Delivery issues are among the most common reasons for chargebacks. Choose a shipping company with a high rating to take care of your orders. A better delivery service can significantly improve clients’ content. Additionally, request the recipient’s signature upon the product delivery to minimize the “product never arrived” customer claim.
- Match the description with the product. The features listed on the product or service page are necessary to help clients choose the desirable option. If the description omits anything, the customer might remain unsatisfied upon receiving the item and request a chargeback. Ensure your product or service descriptions match the features to minimize the risks of chargebacks.
Don’t forget to research the newest fraud trends to adjust your defense system before a problem occurs. Review your chargeback and fraud-related data regularly to notice patterns and detect your weaknesses and unreliable clients that must be blocked.
Final Word
Merchant monitoring programs, such as ECM, EFP, and VAMP, are the tools that monitor sellers' activity and punish non-compliant merchants by applying fees to motivate them to improve their transaction security. These instruments help payment processors protect their reputation, control fraud and chargeback risks, and assist potential high-risk merchants, creating a safe network for every cardholder. While exiting a monitoring program is possible, penalty fines can cause significant financial issues. Thus, a proactive approach is crucial to avoid enrollment in a merchant monitoring program. Therefore, sellers must enhance customer service, track deliveries, block unreliable clients, and invest in chargeback prevention solutions like MidArmor to minimize the risks of exceeding fraud or chargeback thresholds.
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