Verisave July 2025 Newsletter Preview
Visa and Mastercard Announce AI Commerce Initiatives
Visa and Mastercard have shared new details about initiatives they are working on to support the advancement of AI-powered commerce, also known as “agentic commerce.” A number of technology and payment companies have been developing AI-powered shopping assistants that will be able to browse, select and purchase goods for a consumer based upon parameters set by the consumer. The tools Visa and Mastercard are developing will make it possible for the shopping assistants to make secure, seamless payments on their respective payment networks. Technologies including tokenization, biometrics and authentication APIs will be used to authenticate shopping assistants, prevent fraud and collect data for dispute resolution.
According to Visa’s press release, Visa Intelligence Commerce “brings a suite of integrated APIs and a commercial partner program to AI platforms, enabling developers to deploy Visa’s AI commerce capabilities securely and at scale.” The program includes:
- AI-Ready Cards, which will confirm that a shopping assistant is allowed to act on a consumer’s behalf
- AI-Powered Personalization which enables consumers to share Visa spend and purchase insights to improve shopping assistant performance and personalize shopping recommendations, and
- Simple and Secure AI Payments which allows consumers to easily set spending limits and conditions and share information real-time with Visa so it can effect transaction controls and help to manage disputes
In the press release announcing Mastercard Agent Pay, the card brand said its program includes:
- Secure registration and authentication of AI-powered shopping agents
- Facilitation of safe and secure transactions via enhanced tokenization technology that will enable payments to be initiated through conversational interfaces
- Clear rules for consumer control to ensure payments made are securely authorized and identified
- Protection against fraud and consumer dispute support; this will include the use of biometrics, and a process to help clarify transactions by shopping assistants that are not recognized
For more information see:
Visa Acquirer Monitoring Program (VAMP) Updates
Effective June 1st, Visa implemented changes to the Visa Acquirer Monitoring Program (VAMP) launched in April. The information in this blog reflects the latest information available at the time the blog was published.
In April 2025, Visa launched the Visa Acquirer Monitoring Program (VAMP) which consolidated five existing fraud and dispute programs into a single acquirer program and streamlined 38 distinct remediation processes into a single process.
The goal of VAMP is to reduce fraud across the global payments ecosystem by helping improve risk controls. According to Visa, compared with previous programs, VAMP has the potential to address four times the amount of fraud globally, accounting for more than $2.5 billion of fraud losses.
VAMP brought significant changes to the way fraud and chargebacks are measured and monitored. In an effort to create a more comprehensive view of fraud and chargebacks, it replaced the Visa Dispute Monitoring Program (VDMP ) and the Visa Fraud Monitoring Program (VFMP) with a new framework.
VAMP Ratio Calculation
The VAMP ratio is a transaction count-based metric that combines fraud and non-fraud chargebacks; it only includes card not present transactions. The ratio is calculated monthly as follows:
Number of reported fraudulent transactions (TC40) + Number of disputes (TC15)
Number of Settled Transactions (TC05)
Fraud disputes (TC40 disputes) resolved through Visa’s Compelling Evidence 3.0 and non-fraud disputes (TC15 disputes) resolved through Rapid Dispute Resolution (RDR), Verifi’s Cardholder Dispute Resolution Network service (CDRN) or Ethoca will be excluded from the VAMP ratio. However, both the original dispute and the resolution must be in the same month for the TC40 or TC15 dispute to be excluded from the VAMP ratio.
VAMP Ratio Thresholds
With the launch of VAMP, new ratio thresholds were established for merchants, and ratio thresholds were established for acquirers as well. Acquirers and merchants who exceed the thresholds will be subject to fees as follows:
| Acquirer Portfolio - Early Warning | Acquirer Portfolio - Above Standard | Acquirer Portfolio - Excessive | Merchant - Excessive | |
|---|---|---|---|---|
| VAMP Ratio Threshold Effective 6/1/25 | ≥40 bps to <50 bps | ≥50 to <70 bps | ≥70bps | ≥220bps |
| VAMP Ratio Threshold Effective 4/1/26 | ≥40 bps to <50 bps | ≥50 to <70 bps | ≥70bps | ≥150bps |
| Fee per TC40 and TC15 dispute | N/A | $4 | $8 | $8 |
Note: VAMP ratio thresholds only apply if the combined number of fraudulent (TC40) and disputed transactions (TC15) a merchant has exceed 1,500 in a month.
Enforcement for “excessive” merchants and acquirers begins October 1, 2025 and enforcement for “above standard” acquirers begins January 1, 2026.
Enumerated Transaction Ratio
In addition to the VAMP ratio, Visa is introducing a ratio for enumerated transactions. These types of transactions are associated with card testing fraud. Enumerated transactions will be confirmed using Visa’s Account Attack Intelligence (VAAI) model. The VAMP Enumeration Ratio is calculated as follows:
Number of Enumerated Authorization Transactions (approved + declined)
Number of Authorization Transactions (approved +declined)
Merchants with more than 300,000 enumerated transactions (approved + declined) who exceed an enumeration ratio of 20% may face penalties.
Implications for Merchants
Merchants are advised to review their chargeback and fraud management policies and controls, and they are advised to confer with their processors as the introduction of thresholds for acquirers may cause them to impose new requirements on merchants so they can remain in compliance.
If you have additional questions, contact your processor who will be able to address questions related to VAMP.
For more information about Visa's new Visa Acquirer Monitoring Program:
Illinois Interchange Prohibition Act Delayed Until 2026
Illinois has delayed the effective date of the Illinois Interchange Fee Prohibition Act (IFPA) by one year to July 1, 2026. The fate of the IFPA remains unclear as litigation challenging the bill has yet to be resolved.
The IFPA prohibits the collection of interchange on sales taxes, excise taxes, and tips, if a merchant elects to separate out those charges from the price of a purchase. It also prohibits participants involved in an electronic payment transaction (except the merchant) from transferring or using data from that transaction except to facilitate or process the transaction, or as required by law. Each violation of the IFPA is subject to a $1,000 penalty per transaction for the merchant acquirer.
In August 2024, the American Bankers Association (ABA), America’s Credit Unions, the Illinois Banker Association and the Illinois Credit Union Leage filed a suit seeking an injunction. In December 2024, the US District Court granted a preliminary injunction blocking the enforcement of the IFPA on nationally chartered banks and federal savings associations, finding that plaintiffs’ claims that the IFPA interferes with the National Banking Act and the Homeowners’ Loan Act had a high likelihood of success. In February 2025, the Court found that the IFPA is also likely preempted under the Riegle-Neal Interstate Banking and Branching Efficiency Act and extended the injunction to cover out-of-state banks doing business in Illinois.
According to the Electronic Transactions Association (ETA), under this preliminary injunction about 90% of card transactions in Illinois are exempt from the IFPA. In March 2025, the plaintiffs filed a motion seeking to have the preliminary injunction extended to cover federal and state credit unions, and the payment card networks.
Other states are watching closely as the IFPA has inspired similar legislation exempting merchants from paying interchange on sales tax and tips. Bills have been introduced in Alaska, Massachusetts, New York, and the District of Columbia.
For more information on the IFPA delay and other states pursuing similar legislation:
- National Law Review article
- Digital Transactions article Senator Dick Durbin (D-IL) and Senator Roger Marshall (R-KS) have failed in their attempt to add the Credit Card Competition Act (CCCA) as an amendment to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
Reportedly, the move to include the CCCA as an amendment was rejected due to concerns that its inclusion could cost votes in favor of the larger bill. The GENIUS act passed the US Senate on June 17th and was sent to the US House of Representatives.
The CCCA was first introduced in 2022, but it has failed to gain the support needed to pass as a standalone bill. A previous attempt by Durbin and Marshall to get the act passed by adding it as an amendment to the National Defense Authorization Act also failed. Despite this latest setback, Durbin and Marshall are expected to continue their efforts to get the CCCA passed into law.
The CCCA seeks to drive down merchant fees by increasing competition among US credit card networks, weakening Visa’s and Mastercard’s market dominance. It directs the Federal Reserve to issue regulations covering issuing banks with over $100 billion in assets. Under the proposed regulations, these banks will not be allowed to restrict the number of networks on which an electronic credit transaction may be processed to less than two unaffiliated networks, at least one of which cannot be one of the two largest networks. Merchants will have the right to choose the network through which their payments are processed.
Opponents of the bill assert that it will impose new costs on consumers and community banks, pose security risks and end credit card rewards programs. One of their key arguments is that retailers will not pass the proceeds of any fee reduction on to consumers. As evidence, they point to a 2014 study by the which found that in response to the 2011 Durbin Amendment that capped interchange fees on debit cards, only 2% of merchants lowered their prices while 23% increased them:
Origins of the Discover Card
While there is much speculation about how Discover Financial Services’ recent acquisition by Captial One Financial Corporation will impact the payments ecosystem, Discover’s origins are not well known. Here is an overview of how Discover got started, and evolved into the card brand it is today.
The Discover card was launched in 1985 by Sears Roebuck and Co., which was the largest retailer it the United States at that time. Discover was part of Sears’ effort to build a financial services business. This included establishing one-stop financial services centers in its retail stores that offered insurance, brokerage and real estate services.
The first purchase with a Discover card was made for $26.77 at an Atlanta Sears store in September 1985. Test marketing continued in Atlanta and San Diego leading up to the national launch in 1986 with a major advertising campaign during the Super Bowl. Initially, the card was accepted at Sears’ 796 retail stores and more than 3,000 branch offices of Sears owned subsidiaries Dean Witter Financial Services, Allstate Insurance, Coldwell, Banker, and Sears Savings Bank. Over time other merchants started accepting Discover cards and in 1989, Discover signed its one millionth merchant.
The Discover card was unusual at the time it was launched because it had no annual fee and it had an innovative new feature – cashback rewards. Sears also planned to create exclusive offers for cardholders, such as a “family savings account,” with a tiered interest-rate structure that increased according to the account balance, and a package of financial services from Dean Witter.
Although Discover had good consumer adoption, the business was unprofitable, and other retailers resisted accepting the Discover card as they believed doing so would help their competitor, Sears. The performance of the financial services centers was also falling short of Sears’ goals. As a result, in 1993 Sears spun off the Dean Witter division, which included Discover, as a publicly traded company. The new company was named Dean Witter, Discover & Co. In 1997, it merged with Morgan Stanley and became Morgan Stanley Dean Witter, Discover & Co.
Over the years Discover continued to build its business. It launched new types of cards, including Discover Platinum, the first “keychain” credit card, and gas and miles rewards cards. It also filed an anti-trust lawsuit against Visa and Mastercard in 2004, citing anticompetitive practices which prohibited their member banks from issuing credit and debit cards over the Discover Network. Discover received $2.75 billion in damages when the case was subsequently settled in 2008.
In 2005 the PULSE payments network was acquired. This enabled PULSE’s more than 4,000 member banks, credit unions and savings institutions to join with the Discover Network. It also gave Discover Financial Services the ability to market and issue debit cards, which it started doing in 2006. Other innovations included the launch of business cards in 2006, and the 2007 introduction of the Motiva card, the first credit card to give cash rewards for good credit management. Initial steps towards global acceptance were also taken during this period as reciprocal card acceptance agreements with China UnionPay and JCB were signed in 2005 and 2006, respectively.
In 2007, Discover Financial Services became an independent publicly traded company after it was spun off by Morgan Stanley. The acquisition of Discover Card International the following year helped put Discover on the path to global acceptance. Subsequent agreements, alliances and strategic partnerships established with companies including PayPal, Korea’s BC card, the Brazilian card network Elo, and foreign banks continued to build Discover’s global presence. Today the Discover card has 30 network alliance agreements and is accepted in over 200 countries and territories.
In May 2025, Discover Financial Services was acquired by Capital One Financial Corporation for $35 billion. The combined entity will have over $650 billion in assets, it will be the largest US credit card issuer by balances, and it will control Discover’s card payment network. Reportedly, Capital One intends to make Discover a key part of its expansion plans.
For more information see:
