VAMP Ratio in Practice: Which Merchants Are Affected Most and Why

Visa has updated the calculation and thresholds in its Acquirer Monitoring Program (VAMP), changing how fraud and chargeback activity is measured. But how do these changes play out in real-world merchant scenarios?

In this follow-up article, we take a closer look at operational models that are more exposed under the new ratio, explain what “double counting” really means in context, and walk through simple example calculations to clarify the impact.

When Double Counting Becomes a Concern

The new VAMP ratio now counts fraud alerts and chargebacks separately, even if they relate to the same transaction. This can be problematic for certain merchant models, especially subscription-based businesses or those with recurring billing.

Business Models More Affected by the Change

While merchants with strong upfront fraud prevention tools may remain relatively unaffected, others, especially those relying on card-on-file setups or recurring billing models, face a much higher risk of being flagged under the new VAMP framework.

1. Recurring Billing (Subscription-Based Models for Digital Goods)

Merchants offering subscriptions, particularly in the digital goods spac,e such as SaaS, gaming, streaming services, or mobile applications, are notably more vulnerable under the new VAMP methodology.

These models typically involve recurring charges to a customer’s account. Over time, customers may forget about these charges, fail to recognize them on their bank statement, or even dispute them despite having legitimately used the service, a behavior commonly referred to as “friendly fraud.”

Because fraud claims do not require supporting documentary evidence, issuers often classify these disputes as fraudulent by default, even when the underlying reason may be different. This broad categorization inflates fraud statistics and contributes to elevated VAMP ratios for affected merchants.

To make matters worse, these disputes often trigger both a fraud alert (TC40) and a chargeback (TC15) for the same transaction. Under the updated VAMP rules, these are now counted separately, so a single customer complaint can be “double-counted,” significantly increasing a merchant’s ratio even in the absence of actual increased fraud.

2. Card-on-File & One-Click Checkout

E-commerce businesses that store card details for faster checkout, especially those with one-click purchase functionality, are also at higher risk. These models minimize friction but can result in higher fraud alerts if the stored credentials are compromised or misused.

Even legitimate customers may forget about a purchase or fail to recognize it, leading them to report it as fraudulent. Again, this results in both TC40 and TC15 entries for a single event.

Mitigation Tactics

• Rapid Dispute Resolution (RDR): Automatically resolves eligible disputes before they become formal chargebacks which can significantly reduce TC15 counts.
• 3D Secure (3DS) on Initial Transactions: Helps authenticate the first authorization in a subscription lifecycle or card-on-file setup. A successfully authenticated transaction can provide liability shift and serve as evidence during dispute resolution.
• Use of Wallets for Initial Authorization or Checkout (Apple Pay / Google Pay): These methods include biometric authentication (e.g., fingerprint or Face ID), creating a high-trust environment. Transactions verified this way are typically more secure and less prone to disputes.
• Tokenization and Secure Credential Storage: Ensures that card data is safely stored, minimizing the risk of account takeover and unauthorized transactions.
• Behavioral Analytics and Risk Scoring: Monitors for unusual purchase behaviors to trigger additional verification or block high-risk transactions in real time.

Example calculation:

A customer forgets about a monthly subscription charge. They flag it as fraud with their bank (creating a TC40) and then file a chargeback (TC15). In the old system, this was counted once. Under the new rules, both are counted.

Without mitigation tools like Rapid Dispute Resolution (RDR), these merchants are more likely to exceed the 0.5% threshold, even without an actual increase in fraud or customer dissatisfaction.

Practical Example: VAMP Ratio Calculation

Let’s say a merchant has the following monthly data:

• Fraud alerts (TC40): 60
• Chargebacks (TC15): 40
• Total settled transactions (TC05): 12,000

VAMP Ratio = (TC40 + TC15) / TC05
VAMP Ratio = (60 + 40) / 12,000 = 100 / 12,000 = 0.83%

Now, imagine that 45 of those disputes were resolved early through Rapid Dispute Resolution (RDR) or qualified under Compelling Evidence 3.0, and those would be excluded from the VAMP ratio calculation.

Adjusted VAMP Ratio = (60 + 40 – 45) / 12,000 = 55 / 12,000 = 0.46%

Result: The merchant’s adjusted VAMP ratio is 0.4%, which is within the acceptable threshold and avoids being flagged as excessive.

Effective VAMP ratio management requires proactive monitoring and the right mitigation tools. Leveraging solutions like 3DS, RDR, and Compelling Evidence 3.0 alongside regular transaction reviews and strong collaboration with your acquirer can help reduce risk, ensure compliance, and maintain performance under the updated framework.