Visa has announced updates to its VAMP ratio calculations, bringing changes that could impact how businesses handle disputes. Previously, resolved cases through CDRN, RDR, and Order Insight inquiries were excluded from these calculations. This new update adjusts the rules, leaving merchants with important details to navigate as they work to manage chargebacks effectively.
What’s Changed? The Key Updates to VAMP Calculations
Visa’s latest update changes how certain disputes affect the VAMP ratio, and businesses need to adjust their approach to keep their numbers in check. Previously, disputes resolved through tools like CDRN and RDR didn’t count against the VAMP ratio. For example, if you used RDR to refund a disputed transaction, the TC40 data tied to that dispute wouldn’t impact your ratio.
Here’s how the old formula looked:
Now, Visa has clarified that not all CDRN cases will be excluded. Non-fraud disputes resolved through CDRN will still be left out of the VAMP ratio. This is because resolving non-fraud disputes prevents TC15s (chargebacks) from being filed, keeping your metrics clean.
However, fraud-related disputes (TC40s) resolved through CDRN will now be included in the VAMP ratio. Even though these disputes stop chargebacks from happening, they’ll still count against your ratio under the updated rules. While Visa’s reasoning for this is unclear, we speculate that because RDR is used network-wide and CDRN is issuer-dependent, Visa would like merchants to prefer RDR alerts over CDRN.
What Does This Mean for Businesses?
Visa’s updated VAMP ratio rules bring some important points to consider for businesses. While these changes may seem complex, breaking them down makes it easier to see how they affect your operations and chargeback management strategies.
1. CDRN is still effective for non-fraud disputes.
CDRN remains a reliable tool for resolving non-fraud disputes without impacting your VAMP ratio. For example, if a customer dispute is resolved through CDRN, a TC15 chargeback won’t be filed. This keeps your ratios low and benefits both Visa and Mastercard metrics. For merchants, this means you can continue to rely on CDRN to handle issues like billing errors or service misunderstandings without worrying about the ratio effects.
2. Including TC40s in the ratio could improve accuracy.
Visa’s decision to include TC40s resolved via CDRN might actually help in the long run. Since CDRN operates outside Visa’s systems, while RDR and Order Insight use Visa technology, this update ensures that calculations are based on consistent data. Mixing information from different systems could have led to errors, so this change may lead to more accurate metrics that reflect the true performance of your business.
3. RDR is now more important than ever.
Rapid Dispute Resolution (RDR) has become an even more powerful tool. Unlike CDRN, RDR can remove both chargebacks and TC40s from your ratio. For businesses, this is a big advantage. For instance, if a dispute is resolved through RDR, the TC40 is effectively eliminated from the calculation, giving you a cleaner ratio and fewer complications.
Final Thoughts
Visa’s updated VAMP ratio rules show how important it is to handle disputes the right way. With CDRN still helping with non-fraud cases and RDR now more powerful than ever, you have tools to keep your ratios in check and protect your business. Need help reducing chargebacks and disputes? Chargeblast’s got your back.
We connect with issuers to alert you when a chargeback is about to happen, giving you the chance to resolve the issue before it escalates. With a fast setup, proven results in reducing chargebacks, and the ability to intercept disputes before they impact your record, Chargeblast can protect your business from fees and keep you off high-risk monitoring programs.
