It may seem a little late in coming but e-commerce has forced a radical overhaul of Visa’s dispute monitoring system. Launched in the 1990s, the old technology served the payment card services provider well for nearly 30 years but e-commerce was a theory back then, there was no concept of social media payments and no gaming.

As technology and the digital society evolved, Visa was busy patching up the payment platform with software sticking plasters, making incremental improvements. However, with the acceleration of real time payments and AI, incremental improvements are no longer enough.

To ensure customer confidence, Visa cannot afford to have the tiniest blip in the system. The same customer that is doing a one-dollar digital download today will be doing a US$1,000 airline ticket tomorrow. If either of those transactions have any disruption in them as a result of fraud or a dispute, Visa data shows they stop spending and lose confidence in the retailer, which hurts the entire payment ecosystem.

Visa realised it had to prioritise the end consumer experience. The platform also needed to have more flexibility in its business models, where higher transaction amounts would be prioritised over lower volume accounts.

The system was also getting too large for clients, with six programmes to manage overall. It was creating an operational burden, adding more administrative work rather than solving the systemic issues that are causing fraud or disputes.

To address all these problems, Visa recently consolidated its three payment integrity and dispute monitoring programmes into one: an enhanced version of the Visa Acquirer Monitoring Programme or VAMP, to be used by both merchants and acquirers.

To better address consumer pain points related to fraud and disputes, Visa has updated the VAMP ratio to reflect a combined view of risk by measuring both fraud and dispute transactions against the total Visa transaction count. However, unlike before, a fraud alert and a resulting chargeback for the same transaction are now counted separately, potentially increasing a merchant’s VAMP ratio.

“Previously, the VAMP ratio was calculated with the count of fraud and the count of all disputes,” explained Ami Patel, Vice President of Ecosystem Engagement and Advocacy at Visa, speaking at a recent webinar. “But given the feedback we have received from the market, we have now brought in all disputes on that side.”

This helps balance out the equation, she continued. “Previously, it was skewed more towards fraud and so by bringing all disputes in, we are able to have a greater balance of fraud and disputes in the

ratio. It also helps encourage the use of pre-dispute tools, which helps reduce customer friction that goes to the core intent and goal of the programme.”

To be considered for VAMP, a merchant needs to have a minimum of 1,500 combined fraud and non-fraud disputes each month, which are then used to calculate the VAMP ratio.

“If an acquirer is identified, they will not have any enforcement for any volume of merchants that have less than five fraud disputes,” said Patel. “This is to help reduce the operational burden for the client base, but also to make sure we are really addressing systemic issues and not the one-offs.”