Dynamic Billing Descriptors

Cardholders are on high alert for fraud these days. When they look at their account statement and see a charge that looks unfamiliar, they often won’t hesitate to call up their bank and dispute it. The problem is that sometimes, these charges aren’t fraudulent—just difficult to recognize.

It doesn’t help that merchants only get a small amount of text with which to describe their transactions and remind cardholders who they are, but new options like dynamic billing descriptors can help merchants convey specific, memory-jogging details in the limited space they’re given.

Can merchants use features like dynamic billing descriptors to reduce unintentional friendly fraud chargebacks?

Credit card fraud is rampant, especially in e-commerce. It’s understandable that cardholders have gotten hyper-vigilant about checking their statements, looking for unfamiliar charges, and acting quickly to nip fraud in the bud. When a cardholder looks at a transaction and doesn’t remember making a purchase that matches its description, fraud is usually the first explanation that comes to mind.

The billing descriptor is supposed to include the merchant’s name, but some merchants register their business in a different name than what appears on their customer-facing storefront. Even when the names match, some cardholders forget the names of the places they’ve shopped at. Billing descriptors can include contact information, such as a phone number, but some cardholders may be too wary to call a number that they think might belong to a fraudster.

For these cardholders, the next step is to call their issuing bank to report suspected fraud. Sometimes the issuer can provide additional details about the transaction that can help the cardholder remember making the purchase, but if this doesn’t happen, a chargeback is almost certain to follow.

Merchants can fight these chargebacks by showing proof that the transactions were authorized and the cardholder got what they paid for, but it’s always more cost effective to stop a chargeback from happening in the first place. Dynamic billing descriptors are one way to eliminate confusion and avoid these unfortunate scenarios.

What is a Billing Descriptor?

A billing descriptor, also known as a merchant descriptor, is the short bit of text that appears next to a transaction on a cardholder’s bank statement. Its purpose is to provide information about the transaction so the cardholder can readily identify it.

Most billing descriptors are short—no more than 20 to 25 characters, enough to convey only the merchant’s name and location in many instances.

Billing descriptors are managed by the merchant’s acquirer or payment processor. They may offer various types of billing descriptors:

• Soft Descriptors are temporary placeholder descriptors that appear as soon as a transaction is authorized, while settlement is still pending.
• Hard Descriptors are the final, unchanging descriptors that appear once the transaction has been settled.
• Static Descriptors are predetermined by the merchant and appear the same for all transaction types.
• Dynamic Descriptors provide customized information for different transaction types.

Processors may offer descriptor options that combine these attributes. For example, you might have a static soft descriptor that turns into a dynamic hard descriptor.

Your descriptor options depend on the cardholder’s issuer, too. While all issuers should display the basic descriptor text alongside each transaction, some issuers will provide additional information, like a web address or even an image.

How Do Dynamic Billing Descriptors Reduce Chargebacks?

A typical static billing descriptor can convey just a few things to a cardholder: your name, your location, and maybe your phone number or a shortened URL. For e-commerce merchants, providing a location usually isn’t helpful—the cardholder probably doesn’t know where you are located and your out-of-state address won’t look reassuring if they suspect fraud.

Your name is your best change to trigger the cardholder’s memory, but what about merchants who operate multiple storefronts under a single merchant ID? They may have no choice but to provide a descriptor name that’s meaningless to most of their customers.

Dynamic billing descriptors allow you to provide customized information based on what the cardholder bought and where they bought it from. Your processor will receive transaction data via API and use it to generate a billing descriptor that provides product, brand, or storefront information—whatever will make it more informative and recognizable to the cardholder.

By infusing card statements with more accurate, detailed information about transactions, dynamic billing descriptors can reduce cardholder confusion, help them recognize transactions immediately, and greatly reduce the chances that they will file a dispute in error.

What Are the Best Practices for Billing Descriptors?

Dynamic billing descriptors are a great option for merchants, but there’s no guarantee that every payment processor or acquirer offers them—and even if you do get to use dynamic descriptors, you still have to know what to put in them.

Here are some tips for making your billing descriptors more helpful and informative for your customers:

• Keep things simple and straightforward—provide brief, concise information. If you’re an e-commerce merchant, use your URL for your merchant name.
• Use the name your customers know—if your registered business name and the name of your store don’t match, use the name your customers will recognize. If you’re stuck using static descriptors and can’t be sure which name your customer will be the most familiar with, try to make sure that your website and marketing materials include both names prominently.
• Include contact information—a phone number with 24/7 coverage is ideal. It’s also a good idea to include an URL, and you can use a shortener if needed.
• Do a test run—try to see how your descriptors will look on statements from various major issuers. Take advantage of any supplemental data you might be allowed to include, especially logos and other images.

Conclusion

While friendly fraud can be intentional and malicious, there are plenty of cases where it results from an honest mistake—and unclear billing descriptors are a frequent cause of these mistakes. Sometimes, the problem is simply that the merchant never reviewed their descriptor after the initial setup.

Taking the time to update your billing descriptor with your store name and a current customer service number can eliminate many disputes.

However, if dynamic billing descriptors are on offer from your acquirer or processor, the smart move is to take advantage of using them. The more information you can provide to cardholders, the less likely they are to raise erroneous disputes.

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