I would use the same punishment hockey uses for fouls but tweaked.

The first dive from the player causes him to sit out of the game for 5-10 minutes. The second time he sits out of the game for another 5-10 minutes but he also gets a yellow card. Third time (unlikely he would try to dive again) he gets a straight red and ban for two games.

Give them a 1-3 match ban after the game.

How would you know if someone dived? They could lie to the ref and say " he fouled me " or a retarded excuse to be awarded a free kick or penalty or simply time waste.

@jay: Sometimes they notice the dive, sometimes they don't. When they do, they punish them. This is when video replay comes in. Video replay is a must if we want to stop diving.

Actually the ref wont be able view the replay. What if the ref has a far view or bad angle of the dive? that way a player can dodge the ref

The microphone the referee's use could be used to inform him if he cannot see the video replay. That's how in the future (I hope), goals that weren't considered ones could be added. This extra man off the field sees the replays and informs the referee using the microphone.

I agree with the Hockey one.. give them a time-out on the naughty step :)

In the NBA, they are fined a GOOD amount. They should do that if not, increase the value that the player has to pay.

Give them a beating on their ass

I'd say that the best way to punish them would be to ban them from matches, and if they are caught on the pitch, to give an immediate red card. Footballers like Pepe and Dani Alves and Neymar, who earn unbelievable amounts of money, won't care if they're fined each time they dive. But they WILL care if they miss matches.

Retroactive carding. Neymar, for instance, should have been given a card after the game, which would have ruled him out of the final. Brasil don't like it? Tough shi.t. Stop your player from diving and making a mockery of the game that others are trying to win FAIRLY.

give them a life sentence in prison

I agree at 100%. Tired to see so much actors, and it's the same for the bad referees, I'm waiting for the video control in football for years.
But yeah, Football would finally be an honest and fair play game >> UTOPY.

Definetly a yellow card or a red card if it is repetitive.

And maybe some disciple meeting.

For example: If player have hard contact in the box,he have to fail even if he can stay on his feets . Every manager support that .That is part of every football academy . But failing without contact should be punished with 2-3 games ban .