Every card-not-present merchant lives with a number: their chargeback ratio. Cross the wrong threshold and your merchant ID (MID) enters a monitoring programme — VDMP for Visa, MATCH / EDMP for Mastercard — that starts a stopwatch on your card processing. This is the actual arithmetic and the actual thresholds, so you can operate above the line instead of finding out the hard way.

The four ratios you need to know

1. Chargeback-to-transaction count ratio

The number Visa and Mastercard care about most. Formula: (chargebacks this month) ÷ (successful transactions this month) × 100. Both schemes calculate this monthly.

2. Chargeback-to-transaction value ratio

Some schemes and acquirers also track by value. High-ticket refunds hurt disproportionately here.

3. Fraud-to-transaction count ratio

Reason code 10.4 / 4837 — card-not-present fraud specifically. This is a separate ceiling from generic chargebacks.

4. Excessive fraud ratio (Visa VFMP)

Same as above but for the specific Visa Fraud Monitoring Programme trigger. Combines volume ($) + ratio (%) thresholds.

The actual thresholds

  • Visa VDMP (Standard): 0.90% chargeback ratio AND $75,000 in monthly chargebacks. Enters Early Warning.
  • Visa VDMP (Excessive): 1.80% chargeback ratio AND $250,000 in monthly chargebacks. Enters Excessive tier — higher assessments, potential MID termination.
  • Visa VFMP (Standard): 0.90% fraud ratio AND $75,000 in monthly fraud.
  • Mastercard ECM (Excessive Chargeback Merchant): 1.50% chargeback ratio AND 100+ chargebacks. Same escalation ladder.
  • Mastercard HECM (High Excessive Chargeback Merchant): 3.00% chargeback ratio AND 300+ chargebacks. Termination is the default outcome without a viable remediation plan.

Practical takeaway: many merchants aim internally for <0.60% CB ratio as a working ceiling, giving themselves 30 basis points of headroom before the scheme monitoring programme triggers.

Why the vertical matters

The threshold is the same across verticals — but the natural chargeback baseline is not. iGaming, retail forex / CFD brokers, adult content, crypto on-ramps, and subscription businesses with aggressive trial-to-paid conversion all sit structurally higher than physical-goods e-commerce. Underwriters like Velocity price the additional risk into interchange, rolling reserve, and 3DS challenge frequency — not by refusing to book the vertical, but by engineering the acceptance flow around the scheme thresholds.

How Velocity monitors merchants in real-time

  • Flash AI (our operations agent) monitors every MID against VDMP / VFMP / ECM projected trajectories daily. When a merchant looks likely to breach a threshold in the current billing cycle, an account manager gets a proactive alert with the specific fraud pattern driving the trajectory.
  • Ethoca and Verifi (chargeback prevention) feeds are wired into the acceptance flow so merchant CRM systems can push refunds pre-chargeback for the ~15-30% of disputes that can be diverted this way.
  • 3DS2 challenge tuning per BIN, per country, per acquirer — we surface the actual authentication rate + auth pass rate so merchants can decide whether to force challenge on a given bucket.

The uncomfortable truth

If you're in a high-CB vertical and your PSP will not have this conversation with you in numbers — not brochure copy, but actual VDMP trajectory reports — you are underwriting your own MID termination. Ask them for last month's chargeback ratio, projected next month, and their remediation playbook. If the answer is "we'll get back to you", you have your answer.