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?
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.
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:
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.
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.
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.
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:
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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