Visa

Visa is a global payment network that operates as both a transaction processing infrastructure and a regulatory authority for acquirers, payment service providers (PSPs), PayFacs, and independent sales organizations (ISOs). Beyond facilitating card transactions, Visa enforces compliance programs that directly impact how merchants are onboarded, monitored, and managed throughout their lifecycle.

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Why Visa Matters for Risk and Compliance Teams

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For acquirers and PSPs operating within the Visa network, compliance is not optional. Visa maintains threshold-based monitoring programs that track fraud rates, chargeback ratios, and prohibited merchant activity across portfolios. When merchants exceed defined thresholds, the acquiring institution faces financial penalties, operational scrutiny, and potential termination of processing rights.

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Key Challenges:

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• Threshold Violations: Merchants that cross fraud or chargeback limits trigger enforcement actions against the acquirer, not just the merchant.

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• Portfolio-Wide Exposure: A single high-risk merchant can impact an acquirer's standing with Visa, affecting the entire portfolio.

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• Evolving Standards: Visa updates its compliance requirements in response to fraud trends, requiring continuous monitoring infrastructure adjustments.

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• Multi-Layered Accountability: Acquirers must manage both their direct relationship with Visa and their downstream merchant compliance obligations.

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Visa's Core Compliance Programs

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Visa operates several monitoring programs that risk teams must track:

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Visa Fraud Monitoring Program (VFMP)

Tracks fraud-to-sales ratios at the merchant level. Merchants exceeding 0.90% fraud-to-sales for Visa transactions enter the program. Standard thresholds apply globally, with early warning and compliance case stages.

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Visa Chargeback Monitoring Program (VCMP)

Monitors chargeback ratios. Merchants with chargeback-to-transaction ratios above 0.90% (and minimum 100 chargebacks per month) are flagged. Acquirers must remediate or offboard merchants who remain non-compliant.

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Visa Global Brand Protection Program (BPP)

Targets merchants involved in counterfeit goods, intellectual property violations, or unauthorized brand use. Acquirers are responsible for screening merchants in high-risk merchant category codes (MCCs) and monitoring for prohibited activity.

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High-Risk MCC Screening Requirements

Visa mandates enhanced due diligence for merchants in categories associated with elevated fraud or reputational risk. This includes gambling, adult content, pharmaceuticals, and nutraceuticals.

Full compliance program details are available through Visa's official rules repository at https://usa.visa.com/support/consumer/visa-rules.html.

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How to Build Effective Visa Compliance Infrastructure

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1. Implement Real-Time Threshold Monitoring

Track fraud rates, chargeback ratios, and transaction volumes daily. Automated systems should flag merchants approaching thresholds before violations occur, enabling proactive intervention.

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2. Establish Tiered Remediation Workflows

Define response protocols for merchants entering early warning stages. This includes enhanced monitoring, transaction limits, reserve adjustments, or mandatory fraud prevention tool implementation.

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‍3. Integrate Enhanced Due Diligence at Onboarding

Screen merchants in high-risk MCCs using merchant underwriting workflows that include business validation, ownership verification, and product compliance checks.

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4. Maintain Audit-Ready Documentation

Visa may request evidence of compliance actions taken against flagged merchants. Risk teams should maintain records of monitoring alerts, remediation steps, and offboarding decisions.

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5. Leverage Ongoing Merchant Monitoring

Continuous merchant monitoring detects changes in merchant behavior, website content, and transaction patterns that may indicate compliance drift or prohibited activity.

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Strategic Impact on Payment Providers

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Visa compliance failures carry consequences beyond fines. Acquirers with poor merchant risk management face increased operational costs, strained relationships with sponsors or processors, and potential removal from the Visa network. For PSPs and PayFacs, maintaining Visa compliance protects both processing capabilities and reputation within the payments ecosystem.

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We see acquirers prioritize three areas:

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• Preventative Controls: Stopping high-risk merchants before onboarding, rather than remediating post-violation.

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• Early Detection Systems: Identifying merchants trending toward thresholds while intervention is still effective.

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• Scalable Risk Operations: Building infrastructure that supports portfolio growth without proportional increases in compliance staff.

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Example: VFMP Case Management

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A mid-sized acquirer processes transactions for 1,200 e-commerce merchants. One merchant, operating in the nutraceuticals category, experiences a spike in fraud chargebacks following a marketing campaign. The merchant's fraud-to-sales ratio climbs from 0.60% to 1.10% over two statement cycles.

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The acquirer's monitoring system detects the breach within 48 hours. The risk team places the merchant under enhanced review, implements transaction velocity limits, and requires the merchant to activate 3D Secure authentication for all card-not-present transactions. Over the next 30 days, the fraud ratio drops below 0.80%, and the merchant exits the VFMP early warning stage.

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Without automated monitoring, the merchant would have remained in the program, accumulating fines and potentially forcing the acquirer into Visa's compliance case status.

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How Ballerine Supports Visa Compliance

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Ballerine provides merchant risk management infrastructure built for acquirers, PSPs, and PayFacs managing Visa compliance obligations. The platform automates merchant underwriting, continuous monitoring, and case management workflows that align with VFMP, VCMP, and BPP requirements.

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Risk teams use Ballerine to:

• Screen merchants at onboarding using verification workflows that assess business legitimacy, product compliance, and fraud indicators.
• Monitor portfolio-wide metrics in real time, with threshold alerts and automated case creation for merchants trending toward violations.
• Document compliance actions for Visa audits, including evidence of due diligence, remediation steps, and offboarding justifications.

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Ballerine's platform integrates with transaction data, chargeback feeds, and external risk intelligence sources to provide risk teams with the operational infrastructure needed to maintain Visa compliance at scale.

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