Running a business and taking card payments brings a ton of responsibilities with it. There are so many that it’s easy to forget or overlook details like merchant billing descriptors. However, the billing descriptor is vital to your payment processing structure. Here, we’ll break down the details of the descriptor – what it is, how it’s used, and how to set yours up correctly. Keep reading to learn more.
What is a Statement Billing Descriptor?
Merchant Billing Descriptor Table of Contents
A statement descriptor is a brief description that appears on a customer’s credit card statement to identify a transaction. It typically appears alongside the transaction amount and merchant name and is used to provide additional context about the purchase.
Statement descriptors are used by businesses to help customers identify and remember transactions, and by credit card processors to facilitate accurate and efficient transaction processing. They are usually limited to a certain number of characters, typically between 5 and 22, and must adhere to specific guidelines established by credit card networks such as Visa, Mastercard, and American Express.
Businesses can customize statement descriptors to reflect their brand or provide more specific information about the transaction. For example, a statement descriptor for a coffee shop might read “Joe’s Cafe,” while a statement descriptor for an online retailer might read “Online Store XYZ.” Clear and accurate statement descriptors can help customers avoid confusion or disputes over unrecognized transactions on their credit card statements.
What are the Types of Billing Descriptors?
There are three distinct types of billing descriptors: pending, static, and dynamic. They are used for different phases throughout the purchasing process. Here’s a closer look at each one:
Pending Descriptors are descriptors that appear next to a charge while it is still in the settlement phase of processing. These descriptors are also referred to as “soft descriptors.” They are sometimes identical to the static descriptor. However, some payment processors will use their own descriptor in this phase, rather than the merchant’s.
Static Descriptors appear on the statement once the transaction has been settled. This is the traditional billing descriptor that we discussed in the previous section. The customer will see a permanent descriptor on their billing statement.
Dynamic Descriptors can be customized by the merchant to reflect more information about the purchase. For example, some merchants use dynamic descriptors to reflect the location of the purchase, or the specific goods or services. This option is sometimes offered to merchants by their payment processors.
What Are the Requirements for a Billing Descriptor?
Although billing descriptors can be customized for your business and specific types of purchases, the format has some requirements. Here are some of those requirements:
- Contains between 5-22 characters (depending on the issuing bank)
- Characters can only be Latin
- Contains at least one letter
- If using a prefix or suffix, each must have at least one letter
- Cannot contain any of the following characters: * “ ‘ \ > <
- Reflects your DBA name (DBA = Doing Business As)
- Each merchant account will have its descriptor(s)
The more descriptive it is, the more likely your customers will recognize the charge on their billing statement. If the descriptor is confusing or does not clearly state the charge, you risk confusion on the customer’s end and the potential for disputes and chargebacks. Learning some best practices for setting up your billing descriptor will help mitigate these risks.
How to Choose a Good Billing Descriptor
Whether you already have a descriptor or are just getting started, setting it up meaningfully is an important step. Here are some elements of a good billing descriptor. When you go through the process of choosing yours, consider these critical elements.
Clarity: A good billing descriptor should be clear and concise. It should accurately reflect the nature of the transaction in a way that the customer easily understands. Try to see the billing statement through your customers’ eyes.
Relevance: The descriptor should be relevant to the business or product being sold. It should be specific enough to help the customer identify the purchase, but not so specific that it becomes confusing or misleading. You need the customer to recognize the purchase when they see it.
Branding: Including your business name or brand in the billing descriptor can help reinforce your brand identity and make it easier for customers to remember the purchase. Chargebacks often occur when consumers see a charge on their statement and don’t recognize the company information or can’t remember making the purchase.
Accuracy: The descriptor should accurately reflect the amount charged and the transaction date. This seems pretty basic, but it’s important to note.
Compliance: The billing descriptor should comply with the guidelines set by the credit card networks, such as the length and format of the descriptor.
Contact information: Including contact information, such as a phone number or website, can be helpful for customers who have questions or concerns about the transaction. If there is a phone number to call, many consumers will call that merchant before filing a dispute. However, this means that you need the phone number to be monitored and answered when people call!
How Billing Descriptors Cause Chargebacks
Final Thoughts
Viewing your business and customer experience through the customer’s eyes is always a good idea. When choosing a billing descriptor, really think about what the customers will see on their billing statement and whether it will remind them of your brand, business, and the specific purchase they made. Alleviating confusion on the customer’s billing statement is an excellent way to avoid confusion and build brand loyalty.
