What is a billing descriptor?

What is a billing descriptor?

A billing descriptor is a short text on a customer’s bank statement that identifies a transaction or business. Billing descriptors are also known as merchant descriptors, billing names, or statement descriptors. Businesses usually define billing descriptors when setting up their merchant accounts.

Billing descriptors indicate a charge, providing the cardholder with context about their transactions. This allows customers to recognize the transaction and understand the origin.

What is a good statement descriptor?

A good statement descriptor:

• Is short (Business name + location, Business name + product/service + location, or website name + product/service.
• Avoids generic names such as 123 company. Instead use: 123 groceries
• Adds contact information, such as a customer support number
• Only use URLs as necessary (if the purchase came from the online store)
• Examples include: NETFLIX $22.99 and Paypal*Amazon*5699 $40.00.

Types of billing descriptors

There are two categories of billing descriptors: soft or hard, which are classified as either static or dynamic:
Soft descriptors
Soft descriptors refer to pending transactions. These descriptors appear on a cardholder’s online transaction log when the issuer authorizes the charge. They’re usually replaced with a permanent descriptor once the transaction goes through.

Hard descriptors

This is the permanent billing descriptor that replaces the soft descriptor on the cardholder’s statement after settling the transaction. It may take a few days to appear on the statement with the final charge amount.

Static descriptors

Static descriptors include only the name of the business. They’re a good option of the business has one product or service. This way, customers could recognize charges from the company on their card statements.

Dynamic descriptors

Dynamic descriptors include more details in the billing descriptor, such as:

• The company name, shortened to three letters followed by an asterisk
• A description of the product or service provided
• The company’s phone number

Dynamic descriptors do not exceed 20–25 characters.

How billing descriptors can help prevent chargebacks

Billing descriptors are a tool that businesses use to reduce chargebacks. A chargeback is a funds reversal following a debit or credit card purchase that occurs when the customer disputes a charge with their bank or credit card provider.

Customers may request chargebacks when they don’t recognize a charge on their card statement. A billing descriptor that states the name of the business can help limit the amount of chargebacks customers request.

What is an example of a billing descriptor?

An example descriptor could be “A&R Auto.” A dynamic descriptor would be “A&R Auto Shop.” Each merchant account will have its own descriptor.

Best practices for optimizing your billing descriptor

1. Use the ‘Trading As’ (T/A) name
Businesses usually have a legal name and a Trading As (T/A) name. If these names differ, always include the T/A name in the billing descriptor, since it is easily recognizable by customers.
2. Simple descriptors are best
Keep the descriptor simple and direct to avoid confusion.
3. Include a phone number for customer support
Businesses can add this in the second part of the billing descriptor and it’s not included in the 20-25 character limit. If a customer has the contact information, they can opt to call the business with any concerns, instead of reporting the transaction to their issuing bank for a chargeback.
4. Place the billing descriptor throughout the website
Familiarize customers with the name of the business by ensuring the T.A. name appears throughout the website. This helps customers easily recall the business when they view their credit card statements. If a customer searches for the descriptor on a search engine, the business should be on the first page of the search results.
5. Send out test transactions
Sending out test transactions allows businesses to try different descriptors to see which one customers recognize most. Use test credit card numbers to perform these transactions and see how they appear on bank statements, showing what customers will see.