What Businesses Need to Know About the VAMP Ratio and how it is affected by TC40
Visa’s Acquirer Monitoring Program (VAMP) introduces stricter fraud and dispute monitoring requirements for acquirers and their merchants. Understanding how transactions are counted in the VAMP ratio is essential for businesses looking to manage risk and maintain compliance. One key aspect of VAMP is the use of TC40 reports and early fraud warnings (EFWs) to track fraudulent activity.
This guide explains how EFWs relate to TC40 metrics, how disputes are counted, and what businesses should do to monitor fraud effectively.
How the VAMP Ratio Is Calculated
The VAMP ratio is a measure of fraud and non-fraud disputes relative to total settled transactions. Visa uses this ratio to assess risk and monitor acquirers and merchants. The formula is:
Key considerations:
- EFWs (early fraud warnings) are included in the fraud component of the ratio, as they indicate transactions flagged as potentially fraudulent.
- Non-fraud disputes (such as chargebacks due to customer dissatisfaction or processing errors) are also included in the ratio.
- Transactions are only counted once. If a transaction initially flagged as an EFW later becomes a dispute, it is not counted twice.
The Role of TC40 Reports and Early Fraud Warnings (EFWs)
Visa generates TC40 reports based on fraud data collected from issuing banks. These reports include:
- Details of transactions flagged as fraudulent.
- EFWs issued to alert merchants and acquirers of potential fraud before disputes escalate.
Do EFWs Count Towards TC40 Metrics in VAMP?
Yes, transactions identified in an EFW are considered under TC40 metrics and included in the VAMP fraud ratio. Since issuers flag these transactions as potential fraud, they contribute to Visa’s fraud monitoring calculations.
Are Transactions Counted More Than Once in VAMP?
No, each transaction is counted only once in the VAMP calculation. If an EFW transaction later escalates to a dispute, it remains a single entry in the fraud ratio.
What Happens When a Transaction Is Settled?
The VAMP ratio is based on settled transactions, meaning:
- If a transaction has been settled, it is included in the total transaction count.
- Issuing a refund does not remove the transaction from this count.
Some merchants have attempted to use refunds as a strategy to prevent chargebacks after receiving an EFW. However, since the transaction is still counted, this approach does not affect the VAMP ratio.
Best Practices for Managing Fraud Under VAMP
To maintain compliance and reduce fraud-related issues under VAMP, businesses should:
- Monitor EFWs and TC40 Reports Closely – Track these warnings in internal fraud metrics to detect patterns and respond proactively.
- Implement Strong Fraud Prevention Measures – Use advanced fraud screening tools, like the ones included with Rapyd’s Card Acquiring solution, to identify and block high-risk transactions before they are processed.
- Educate Customer Support Teams – Ensure teams understand how disputes impact fraud ratios and explore resolution strategies that reduce chargeback risks.
- Work With an Experienced Payment Provider – A payment partner with expertise in fraud monitoring and dispute management can help optimise authorisation rates while minimising risk.
Solve Payment Challenges with Rapyd
Managing fraud risk and maintaining compliance under VAMP requires expertise and the right payment solutions. Rapyd provides businesses with the tools they need to process payments securely and optimise transaction success rates.
Why Choose Rapyd?
- Direct Visa and Mastercard acquiring in the UK, Europe, Israel and Singapore
- Cards, plus Google Pay, Apple Pay and hundreds of payment methods
- Built-in fraud monitoring and dispute management.
- Among the best authorisation rates globally
- Payments, payouts and multi-currency business accounts
