NDMS Risk Compliance Program
Fraud Compliance Program
Level of fraud identification: Level 1 being the least severe, level 3 being the most severe
VISA
Merchant Fraud Performance (MFP) Program
MASTERCARD
Global Merchant Audit Program (GMAP)
FRAUD T
HR
ESHOLDS
(At
Ou
tl
et
Le
ve
l)
Level
1
US $25,000 of reported cross-border fraud
25 cross-border fraud transactions
2.5% cross-border fraud-to-sales ratio
Level 1
Fraud-to-sales ratio >= 3% and <= 4.99% and
> 3 fraud transactions, and
> US $3,000
Level
2
US $250,000 of cross-border reported fraud
2.5 percent cross-border fraud to sales ratio
Level 2
Fraud-to-sales ratio >= 5% and <= 7.99% and
> 4 fraud transactions, and
> US $4,000
Intentionally left blank
Level 3
Fraud-to-sales ratio >= 8% and
> 5 fraud transactions, and
> US $5,000
VISA
Merchant Fraud Performance (MFP) Program
MASTERCARD
Merchant Online Status Tracking (MOST) Program
FRAUD
RE
M
ED
IA
TI
ON
FRA
M
EWO
RK A
N
D
PEN
AL
TY
ST
RUC
TU
RE
Level
1
Merchants given 3 months (workout period) to reduce fraud below threshold.
If fraud level continues to exceed threshold after workout period, issuers have right to chargeback all intra-regional fraud transactions (from 1st day after the workout period).
Remediation is considered successful if fraud falls below the threshold for 3 consecutive months.
If the inter-regional cross-border fraud exceeds thresholds, issuers in other regions will have the same rights as issuers in issued card country, to chargeback fraud transactions. Revocation of acceptance privileges may result for
merchants who persistently exceed the fraud thresholds.
Level
1
Informational Fraud Alert – No action required but MasterCard recommends that an enhanced fraud control program be implemented at the merchant location
Level
2
No workout period. Issuers have the right to chargeback all intra-regional fraud transactions starting from the first day of the month when fraud exceeded the threshold If the intra-regional cross-border fraud exceeds threshold,
issuers in other regions will have the same rights as issuers in issued card country to chargeback fraud transactions Revocation of acceptance privileges may result for
merchants who persistently exceed the fraud thresholds.
Level
2
Suggested Training Fraud Alert - No action required but
MasterCard recommends that an enhanced fraud control program be implemented at the merchant location
Intentionally left blank
Level
3
If GMAP identifies a merchant location in Tier 3, MasterCard will determine whether to initiate an audit of merchant location. If MasterCard decides to conduct a Tier 3 audit, the following process will apply:
1. MasterCard notifies acquirer
2. Acquirer response due within 30-day response period 3. Fraud control action plan required within 90-day action period
Chargeback Compliance Program
Notes: The Card Brands identify merchants based on “chargeback month”, which defines as the month
in which the chargeback transaction was submitted and processed through Visa/MasterCard.
For present merchants, performance is conducted at the distinct merchant outlet level. For
card-not-present merchants, the Card Brands have the option of evaluating Merchant, Internet Payment
Service Provider (IPSP), or Sponsored Merchant Level.
VISA
MASTERCARD
CHA
R
GE
BA
CK
T
HR
ESHO
LDS
Chargeback
Warning Notification
100 sales count, and
100 chargeback count, and
1% chargeback-to-sales count ratioChargeback
Merchant
Monitoring
(CMM)
Chargeback-to-Transaction ratio (CTR) > 0.5% and
> 50 chargebacks in a calendar monthGlobal Monitoring
Chargeback
Monitoring Program
(GMCMP)
200 sales count, and
200 chargeback count, and
2% chargeback-to-sales count ratio
Excess
Chargeback
Merchant
(ECM)
Chargeback-to-Trans ratio (CTR) > 1% and
> 50 chargebacks in each of 2 consecutive
Workout is not applicable for high-risk merchants whose activities may cause undue harm to the
goodwill to the payment system (Visa, MasterCard, Bank, NDMS, or the like). Enforcement begins
immediately.
VISA
MASTERCARD
C
HAR
G
EB
A
C
K
R
EM
ED
IA
TI
ON
FR
AMEW
ORK
AN
D
PEN
AL
TY
ST
RUC
TU
RE
Global Monitoring Chargeback Monitoring Program (GMCMP)
Upon identification, Visa may provide a 3-month remediation or “workout” period for a merchant to reduce chargeback levels to below the thresholds. Failure to do so will result in fines imposed as follows: 4th – 6th month of identification – US
$100 per chargeback until effective remediation
7th – 10th month of identification – US $200 per chargeback for continued non-compliance
>10th month of identification – US $25,000 review fee, restriction of acceptance privileges, and potential disqualification from the payment system
Remediation will be considered success after the merchant has performed better than the chargeback thresholds for three consecutive months.
Chargeback Merchant Monitoring
(CMM)
US $50 for each CMM report submitted
US $5,000 per month for each month that a
specified monthly CMM report is overdue
Intentionally left blank
Excess Chargeback
Merchant (ECM)
Reporting Fee for each ECM report – US $300 (late submission from US $500 per day)
In addition to any applicable assessments for CMM reports, ECM reports, or late report submissions, MasterCard may impose violation assessments and claim issuer reimbursement fees.
Description
Fees
N
DM
S
PEN
AL
TY
ST
RUC
TU
RE
Excessive
Chargebacks
Additional fees per chargeback and
compliance, if above reasonable
chargeback levels, as determined by
NDMS in its sole discretion, will apply.
Up to $100 per chargeback
Cumulative from the beginning of month 1.
