VISA and MASTERCARD Regulations
 

OK here is some more info on the regulations. These are for the international divisions.




Global Merchant Chargeback Monitoring Program

This program affects all merchants and, where the defined parameters are breached, may result in fines of $100 per chargeback:

?Merchant chargebacks (non-UK issued cards) exceed 100 per month

AND

?Merchant chargebacks (non-UK issued cards) exceed 2.5% of transaction volume per month

Minimum fine $10,000

Visa International - $100 per chargeback for the month in which the rules were breached.


Mastercard

Under this program, MasterCard may impose fines per chargeback where the following levels have been breached for two consecutive months (referred to as months 1 & 2):

?A minimum of 15 chargebacks has been processed in the month.

AND

?The merchant chargeback value ratio for the month is 2.5% or greater of total transaction value.

OR

?The merchant chargeback volume ratio [number of chargebacks to number of total sales ratio] is 1% or greater.

The fines will be calculated on a tiered basis, as follows:

-$25 per chargeback in months 3-5 (plus $25,000 per month)
-$50 per chargeback in months 6-7 (plus $50,000 per month)
-$75 per chargeback in months 8-9 (plus $75,000 per month)
-$100 per chargeback in months 10 or beyond [plus $100,000 per month]

Handling of credits

Mastercard will consider a credit as a chargeback if Mastercard believes, in its sole discretion, that the member generated the credit to avoid applicability of the new rules, such as for any of the following situations:

?As substitutes for chargebacks
?When merchants fail to control backroom operation processes
?When credits are equal to or greater than chargeback rates
?By way of a check to resolve fraud or customer service issues.

no one cares??

"Mastercard will consider a credit as a chargeback if Mastercard believes, in its sole discretion, that the member generated the credit to avoid applicability of the new rules, such as for any of the following situations:

?As substitutes for chargebacks
?When merchants fail to control backroom operation processes
?When credits are equal to or greater than chargeback rates
?By way of a check to resolve fraud or customer service issues."

So if you try to resolve a customer service problem by just crediting the customer Mastercard could fine you.

A great summary. I would like to see they same summary on the US regulations which are even tighter.

I don't not think most of the folks here realize this will effect them because most of them do not have their own pay sites or perhaps think their IPSP will protect them.

These new rules will cause some fallout in the next few months.

You forgot to mention the fact that once you enter the chargeback program MC can continue to fine you for a 12 month period regardless of your chargeback ratio.

Clay
EPOCH

Seems like nobody can read here... and you don't even have to read between the lines:

But everything is "fine" ( ... lol ) in our business....

:helpme

Of course some things must change to adapt to the new rules.

There are ways to go to be compliant

Yep, all fucked up. I did hear that they have never actually imposed a fine against a merchant who was just a couple % over.

Interesting, what payment system will we use when CC's will become unusable for adult due to their rules

So much for everyone preaching "we're not based in the US, we use Visa International, so no worries, mate!"

When do these regulations take effect?

Checks ,they will have to get the scrubbing better. If they have a credit card they have a check book.

List your ideas please

That is wrong.

As is your Visa Intl number, it drops to 2% overall in January, it will not be 2.5%.

MC also reserves the right to disallow rebills after two months out of compliance.

that could fuck a lot of people's business :2 cents:

Does anyone have any stats on previous and current chargebacks ratios for sites with trials/monthly/rebills etc. ?

Perhaps a lot of companies already stay under their percentage? I'd be interested in knowing how secure we should feel.

:: puts dialer programs on stand-by :: :1orglaugh

Bastards!

Hi,

As the rules tighten up, so must the billing techniques. IMO, getting rid of Free trials and in some instances paid trials as well as cross sells, will certainly reduce sales but will greatly reduce chargebacks too. Cross sells almost always raise dispute numbers from our analysis and it is obvious trial memberships do also. I am not bagging on any one as we have many merchants doing cross-sells and several doing free trials. I am simply stating facts from our analysis.

Mitch

I was referring to now, not January.

In my opinion if someone charges back they are saying they didnt do it.. therefore the credit card company should cancel the card, but of course they won't...

The banks see it as a big expense to re-issue cards everytime someone cries "FRAUD". They typically only do it at the consumer's request or if the card was stolen.

Mitch

Cross sales are not necessarily the problem. I know of at least one company whose crosses result in fewer chargebacks and longer retention than their new sales.

Just goes to show that purchasing crosses from others whose sites aren't as good can be profitable.

Mitch, Kim or someone.. Could you post a concise summary of the rules of US webmasters from both Visa and MC. The summary above is a great template. Are just the percentages different or are there other differences?

Im not agree with you, some times people save money this way...

We only planing to open merchant account, maybe we can think out some cooperation to keep chargebacks ratio on this level?

please contact me at 5557407

Well said :Hollering

The f*cking credit card companies lose nothing when a customer charges back. As webmasters, we are held responsible - the customer loses nothing, the credit card company loses nothing - yet we must refund money to the customer, pay charge back fees, $750 Visa fees - and live with the threat of losing everything at any given moment!

This business is being systematically destroyed by the powers that be.

Is there a case for a class action suit here somewhere?

This is pretty sick.

It appears there may be a case for your "destroyed by the powers" statement.

I am assuming all of this applies to "ePASSPORTe.com" commercial accounts as well?

I'm not familiar with epassporte...

It just seems that every time we turn around there are new laws, fees, regulations and restrictions placed on adult webmasters regarding credit card transactions.

To the best of my understanding,

ePASSPORTe.com is a virtual ANONYMOUS Visa. You charge it up and put whatever you want as the Visa name. You could use "Donald Duck" if you wanted to. Then you take that Visa to a website and make your purchase like normal. The MERCHANT does not know who you are - rebills are not allowed (?) currently.


I believe, since Visa has pretty much destroyed all Adult Verifications Systems (AVS's) that "ePASSPORTe.com" type transactions are absolutely necessary for online freedom of speech especially in this "new" blogging era.

There must be a way for authors to accept payment without knowing who is supporting their disemmination of information.

And I'm a good example of this. I purposely go out onto boards and push peoples buttons to get attention. In other words, I go "blog" to win my customers one at a time. However, my "colourful" manner in which I do things ; ) ... is not necessary something someone wants to be associated with - even though they wish to support the disemmination of the information.

It's like - they wish they could say ...
"Any cowardly Father that permits the circumcision of their daughter should be castrated" like I do. But they do not want me to know it was them by their Visa and Email details supporting that initiative.


To me as I have watched this unfold - it's like prohibition.
A purposeful, multi-front two year plan of attack to clamp down on things.
the transaction front ...
the legal front with obscenity prosecutions...
and the accountability front ...

and it's not over yet.

I'm not saying that some changes did not need to occur - they did.

Right but if that card has "fraud" on it? then why are we held liable if they authorize it again?

The merchant is hit with the chargeback, but the bank is the one authorizing it, not the merchant.

If there is CNP or fraud chargeback, they need to cancel that card, otherwise the customer is making it all up.

It would be nice, I agree.

Mitch