The Butterfly Effect

Why are CEOs of the world’s top acquiring banks phoning Visa to protest the new VAMP rules?

“A single TC40 claim, like a butterfly’s flap, could topple a merchant’s standing and an acquirer’s bottom line.”

It’s the Butterfly Effect. VAMP replaces Visa’s old fraud (VFMP) and chargeback (VDMP) programs, which tracked merchant risk with clear thresholds—90/180 bps for fraud dollars, 90 bps for chargeback counts. Exceed those, and merchants faced fines or account closures. Acquirers hated losing merchant revenue but could manage with predictable metrics.

Enter VAMP: a small flap of a butterfly’s wing. Visa now tracks TC40 case counts—reports of claimed fraud from issuing banks, not confirmed fraud. Merchants get tagged with TC40s they can’t dispute or even see until a chargeback hits—if it ever does. Issuers often skip disputes for small tickets ($1-5) or clear transactions later, yet the TC40 still counts against the merchant’s risk ratio.

The chaos ripples. Merchants face a flood of TC40s, far outpacing actual fraud or chargebacks. Many once ‘low-risk’ merchants will now trigger fines. Acquirers, stuck policing this, face portfolio risk spikes and Visa penalties, forcing them to shutter merchant accounts—and lose revenue. A single TC40 claim, like a butterfly’s flap, could topple a merchant’s standing and an acquirer’s bottom line.

With no tools to prevent or avoid TC40s, acquirers and merchants are left exposed. No wonder the phones were lighting up.

Fortunately, Visa listened to these concerns and is "revamping" VAMP to allow disputes resolved with CDRN, RDR or Ethoca alerts to be exempted from the TC40 calculation. They are also going to monitor TC40 threshold levels during the interim period from April - October and evaluate if the current defined thresholds make sense or need to be adjusted. This is a great response to their stakeholders feedback and should ultimately yield a better VAMP program that all feel is fair.