How to use billing descriptors to reduce chargebacks

For ecommerce merchants, the descriptor they use to identify the charge is of paramount importance because a consumer can’t always connect a product they received in the mail with the line item on their credit card statement. This confusion can lead to the initiation of a chargeback. In many cases, the consumer indeed made the purchase, but sincerely does not recognize the charge on the bill. Therefore, a carefully chosen billing descriptor could be a simple solution to help reduce these chargebacks.

What is a billing descriptor?

A billing descriptor is the explanation of a transaction that appears on a customer’s credit card statement. It is meant to help customers positively identify their card transactions by including information about the date of each payment and the company from which it was purchased. The length of a billing descriptor is usually limited to between 20 to 25 characters, plus the merchant’s phone number at the end. It is meant be as direct as possible and take advantage of the full-length allowance, providing customers with a detailed reminder of what has been purchased.

There are three types of billing descriptors: A default billing descriptor (static), a soft descriptor and a dynamic descriptor.

Default billing descriptor

The default billing descriptor (static) is the name of a merchant’s authorized processing company that appears the same for every transaction. This is commonly used when a company offers a single product or service to customers.

For example, Dan and Joe’s Restaurant Ltd. 123-456-78902

Soft billing descriptor

A soft descriptor, or product descriptor, can be customized to the specific product or service your customer paid for, making it easier for them to recognize the transaction. For example, your company, Five Star Laundry, might primarily do laundry and dry cleaning, but may also offer clothing alterations. If someone makes use of the latter service, instead of just ‘Five Star Laundry 123-456-7890’ appearing on their bill, you could have the more useful ‘FSL Alteration 123-456-7890’, which more clearly identifies the charge.

Dynamic billing descriptor

The dynamic descriptor allows modification of the description field in a customer’s statement and can be customized according to the product or service purchased. They can be configured on a per transaction level, making it possible for each transaction to have a different description. Dynamic descriptors give merchants the opportunity to provide additional details and are usually used by businesses offering multiple products or services.

For example, if a customer purchases bike tyres from Dan and Joe’s Bike Shop, and another customer purchases bike chains, the billing descriptor would appear differently on their respective statements:

DNJ*BIKE TIRES 123-456-7890 and DNJ*BIKE CHAINS 123-456-7890

Why the billing descriptor is important for chargebacks

The billing descriptor is important for chargebacks for one simple reason. When your customer comes to check their credit card statement, if the descriptor clearly identifies a transaction, they will recognize and accept the charge. If, however, the descriptor is unclear, your customer might suspect their card has been compromised and would be within their rights to initiate a chargeback with their issuing bank.

For you, the merchant, fighting chargebacks can be costly and time-consuming, even if you do eventually manage to verify the charge. That’s why it’s so important to have a billing descriptor that, as much as possible, reduces the risk of confusion. As well as your business name, if you have space, you can also choose to include your phone number. This makes it easy for a customer to get in touch when they discover an unfamiliar charge and to clear up any confusion without resorting to a chargeback.

Best practices for optimizing your billing descriptor

1. Use your ‘Trading As’ (T/A) name

Businesses commonly operate under a legal name as well as a T/A name. If these names differ, you should always include your T/A name in the billing descriptor, since it is more likely to be recognized by your customers.

2. Simple descriptors are the best

Keep your descriptor simple and to the point to avoid any confusion.

3. Include a phone number for customer support

This can be added in the second part of the billing descriptor and is not included in the 20-25 character limit. If a customer is presented with your contact information, they may opt to call your business with any concerns regarding the product, instead of reporting the transaction to their issuing bank for a chargeback. This may be added to the ‘city field’.

4. Ensure exposure of your billing descriptor

Familiarize your customers with the name of your business by ensuring your T.A. name is visible throughout your website. This will help customers easily recall your business when they view their credit card statement. If a customer copies and pastes the descriptor into an online search engine, your business should ideally be on the first page of the search results.

5. Send out test transactions

Sending out test transactions allows you to trial different forms of your descriptor to see which is the most easily recognizable by your customers. You can use test credit card numbers to perform these transactions and see how they appear on bank statements, which will give you a fair impression of what your customers will see.

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