Billing DescriptorsExploring the Crucial Link Between Descriptors & Customer Satisfaction

10 Tips to Optimize Your Billing Descriptors & Protect Your Revenue From Invalid Disputes

Anytime you complete a transaction online, a record of that sale pops up on your customer’s billing statement. The “billing descriptor” is 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.

The way your descriptor shows up is important. Even if you don’t realize it, failing to optimize your billing descriptor could have a major impact on your bottom line.

What is a Billing Descriptor?

Billing Descriptor

[noun]/bil • ing • də • skrip • tər/

A Billing descriptor is the identifying text displayed on a customer's credit or debit card statement. Descriptors provide information about a transaction and the business related to the charge.

Billing descriptors (sometimes called “account descriptors”) are one of those business details you may not always recognize the impact they have right away. One could say they’re hidden in plain sight…and for good reason.

Businesses generally establish billing descriptors when they set up their merchant accounts. These descriptors typically stay consistent for every transaction (at least for every transaction of the same kind). Individual transactions are distinguished by payment reference numbers, which are shown next to the billing descriptor on the card statement.

Your billing descriptor is like a “numerical fingerprint.” Banks and credit agencies can use it to identify your business.

Why Do Billing Descriptors Matter?

Customers rely on billing descriptors to identify transactions, and if the descriptor is unclear, they are more likely to suspect fraud and file a chargeback as a result.

Imagine a situation in which you’re a cardholder, and you’re reviewing your credit card statement. You see a charge you couldn't recognize, and although you try to identify the company name or the cost of the product, you’re drawing a blank.

Your first reaction was likely to assume your card had been compromised and to contact your credit card company to report the issue, right? Well, your customers would probably respond in a similar manner.

The cardholder calls the bank's customer service line to report an unrecognized charge. This call would trigger a chargeback, initiating a time-consuming and expensive process for you to rectify. Not only would you lose the revenue from the sale during the chargeback investigation, but you would also incur non-refundable chargeback fees.

What Does a Standard Billing Descriptor Include?

Descriptors typically range from 20-25 letters, although the length depends on the issuing bank. Some issuers may truncate the descriptor, causing confusion. Abbreviations can help prevent truncated descriptors and convey a more precise message— but be wary of being too vague! 

A standard billing descriptor may include the merchant’s name. This is the name of the business responsible for the charge; often a shortened, yet still recognizable version of the “doing business as” (or “DBA”) name.

The descriptor may also include any of the following elements:

• Location: This could encompass the city, state, or country of the transaction or the online domain for online businesses.
• Date of Transaction: As the term implies, the date on which the purchase or transaction occurred.
• Transaction amount: The total charge for the transaction, including taxes and additional fees.
• Phone Number: If the business name is short enough, the descriptor may also sometimes include the business's phone number.
• Authorization Code / Transaction ID: A unique identifier for each transaction, useful for tracking or referencing the specific charge.
• Descriptor Code: Some descriptors may feature a category indicator, referencing the type of product or service purchased.
• Status: Descriptors may include the term "pending" or a similar phrase until the transaction is settled.

These components may differ slightly based on the financial institution, payment processor, or merchant's specific practices. Ultimately, though, remember that the primary objective of a billing descriptor is to deliver clear and concise information, enabling customers to easily recognize and understand their transactions.

Billing Descriptor vs. Payment Reference Number

A payment reference number comprises a unique blend of letters and numbers that identify a specific transaction. These references apply to more than just card payments, as they are also used in bank transfers. In contrast to billing descriptors, which should consist of recognizable words and numbers, payment references are formed from random combinations of letters and numbers.

Payment reference numbers serve a different purpose than billing descriptors. When a customer reviews their account statement and observes the payment reference, it doesn't reveal the purchased item or the business it was bought from. That's solely the function of the billing descriptor. However, customers can use payment references when discussing a particular transaction with their bank.

With the combination of billing descriptors and payment references, customers have the necessary information to identify a transaction and reach out to their issuing bank regarding any concerns.

“Soft” vs. “Hard” Billing Descriptors

As mentioned above, descriptor length is usually limited to between 20-25 characters. It commonly includes 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 you need to know about:

“Static” vs. “Dynamic” Billing Descriptors

Soft and hard descriptors aren’t the only distinction to make here. We also need to contrast so called “static” billing descriptors with “dynamic” ones:

You may also have a fixed prefix, and a dynamic suffix. This fixed prefix is what's also know as a shortened descriptor.

Why Adopt Dynamic Billing Descriptors?

Dynamic billing descriptors can also have a big impact on your overall chargeback ratio.  It lets you provide more detailed and customized information on a customer's credit card or bank statement for each transaction. You’re able to avoid many points of confusion that might lead to chargebacks. 

Here are five ways in which dynamic billing descriptors help prevent chargebacks:

#1 |  Enhanced Recognition

Painting a more detailed and accurate picture of each transaction, dynamic descriptors make it easier for customers to recognize the charges on their statements. This can help prevent chargebacks due to unrecognized transactions, which are a common cause of disputes.

#2 |  Clear Communication

Dynamic billing descriptors allow you to include additional information about the specific product or service purchased, making it easier for customers to understand and remember the transaction. This clarity can reduce the likelihood of customers disputing charges due to confusion or misunderstanding.

#3 |  Real-Time Updates

You can update dynamic billing descriptors in real-time, which means you can modify the information as needed for each transaction. This flexibility can help address customer concerns or issues quickly.

#4 |  Improved Customer Support

Dynamic descriptors often include a customer service phone number or other contact information. This makes it easier for customers to reach out with questions or concerns before initiating a chargeback. Prompt and effective customer support can help resolve issues and prevent disputes from escalating.

#5 |  Tailored to the Business

You can customize dynamic billing descriptors to suit your specific business or industry, ensuring that the information provided is both relevant and useful. This customization helps buyers understand the nature of the charge and reduces the likelihood of chargebacks due to confusion.

Dynamic billing descriptors are a valuable tool for merchants. They can help prevent chargebacks by providing customers with more detailed, clear, and relevant information about their transactions. By reducing misunderstandings and improving communication, you’re better positioned to enhance customer satisfaction and safeguard your revenue.

Top 10 Billing Descriptor Best Practices

As mentioned above, optimizing billing descriptors is one of the easiest things you can do to prevent chargebacks. It’s also one of the most effective. Implementing a few billing descriptor best practices can help you improve customer satisfaction, reduce chargebacks, and minimize disputes… all in one place. 

With that in mind, here are the top ten best practices for crafting more effective billing descriptors:

Become a Billing Pro

Your billing descriptor says a lot about your business. It’s absolutely essential to put your best foot forward. Optimizing your descriptors can help you place your business on the right track toward reducing chargebacks, improving brand recognition, and encouraging a positive shopping experience for your customers.

Once you’ve established what you sell, how you sell is the next logical step. Knowing how your business is being represented across all formats, from billing descriptors to public perception, is 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.