Here’s Why Your Billing Descriptor May be One of Your Best Chargeback Prevention Tools
Anytime you complete a transaction online, a record of that sale pops up on your customer’s billing statement. This information refers to the name the customer sees in connection to the sale. It identifies your business and the total price of the goods or services purchased.
You might not pay much attention to how those charges appear on the customer’s end…but your customers do. Even if you don’t realize it, failing to optimize your billing descriptor could have a major impact on your bottom line.
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What is a Billing Descriptor?
- Billing Descriptor
A billing descriptor is the label which appears on a cardholder’s bank statement, which is used to identify the transaction and the merchant tied to the purchase. This is usually set up by the merchant when their account is opened.
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Billing descriptors, or account descriptors, are one of those business details you use constantly. You may not always recognize the impact they have right away. One could say they’re hidden in plain sight…and for good reason.
Your billing descriptor is like a numerical fingerprint that banks and credit agencies will use to identify your business. It may not be recognizable at first glance, but we can’t overstate its importance.
Why Billing Descriptors Matter
Billing descriptors might not seem like a major concern in the grand scheme of things. They could spell big trouble for your business if improperly handled, though. For instance, faulty billing descriptors can lead directly to a spike in chargebacks.
We estimate that 20-40% of all chargebacks are the result of merchant error. One of the most common errors committed by merchants is a poor billing descriptor.
To illustrate: let’s assume you just launched a new merchant account. You have a billing descriptor tied to that account. If your descriptors are off in any way (misspelled, include incorrect location data, etc.), your customers may be unable to recognize your charges when they show up later on their statements. The buyer might believe the transaction is fraudulent and file a chargeback.
Types of Billing Descriptors
As mentioned above, the billing descriptor (also called a merchant descriptor in some instances) describes the way your name appears on your customers’ monthly statements. Descriptor length is usually limited to between 20-25 characters that commonly include your business name and, in some cases, your address and phone number at the end. However, there is more than one type of billing descriptor example you need to know about.
There are three key types with which you need to be familiar:
* Consult with your processor for more information about dynamic descriptors.
At the end of the day, it doesn’t matter whether you use dynamic or fixed billing descriptors. In either case, you need to ensure your descriptors are easy to understand and accurately reflect your business.
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Billing Descriptor Rules
Optimizing billing descriptors is one of the easiest things you can do to prevent chargebacks. It’s also one of the most effective.
Here are some tips to get started:
While it is true that dynamic billing descriptors are the most…well, dynamic option…that doesn’t mean they’re essential. Good billing or merchant descriptors should include the most accurate, convenient, and recognizable details you can include.
If you manage only the basics we’ve listed in this article, you’re ahead of the game. Sometimes, though, the devil really is in the details.
Become a Billing Pro
Once you’ve established what you sell, how you sell is a next logical step. Knowing how your business is being represented across all formats, from billing descriptors to public perception, are all part of the process.
Savvy merchants understand that no area in your business is too minor to invest effort. Therefore, tightening up something as simple as your merchant descriptors should be a small challenge that will pay off repeatedly in the long run.
Have questions about your billing descriptors and where to get started? Continue below to learn more.