Chargeback Monitoring Programs

Card brands employ monitoring programs as both a punitive measure for excessive chargebacks and as a corrective strategy to aid merchants in better-managing chargeback activities. These programs are designed to identify merchants whose chargeback rates exceed industry-standard thresholds, indicating a high level of risk to the card network and financial institutions involved.

Acquirers play a pivotal role in this ecosystem by continuously assessing the risk profile of each merchant under their purview. This involves evaluating specific risk metrics that reflect the merchant’s chargeback performance. Should these metrics surpass the set thresholds established by card brands, the acquirer must enroll the merchant in a monitoring program.

These monitoring programs aim to mitigate potential financial losses and protect the payment system’s integrity by ensuring merchants adhere to best practices for chargeback prevention and resolution. Participation in a monitoring program often necessitates merchants take corrective actions to lower their chargeback rates, including implementing more stringent fraud detection measures, improving customer service practices, or revising transaction processing procedures.