Transaction Descriptors — Everything you Wanted to Know
Choosing a transaction descriptor is critical for running a successful business. The main reason? It can save you money and reduce the number of chargebacks.
Find out about the best practices to avoid the situation that causes your customers to scratch their heads while reviewing their bank statements.
Here we go!
What is a Transaction Descriptor?
As the name suggests, transaction descriptors describe a certain payment, so they help to identify the transaction on a bank statement. Customers can see descriptors on their statements after making a purchase.
Why is creating a clear descriptor important?
Let us put yourself in your customer’s shoes for a while. Imagine that you review your credit card statement and see a charge you don’t recognize. You find it difficult to identify the company name and no contact information is provided. What do you do in such situation? You probably call your issuing bank. Do you see the point?
It helps customers recognize their purchase and makes it easy to identify the order. It also helps to minimize the risk of chargebacks — descriptors that are difficult to identify can confuse customers, leading them to initiate a dispute. Just keep in mind that chargeback requests are often made by consumers who don’t recognize certain transactions.
Also read: How to win a chargeback dispute
Types of Billing Descriptors
There are two main types of transaction descriptions and these are Static and Dynamic descriptors.
A static descriptor (also known as a hard descriptor) is set for all transactions and it’s especially convenient when you sell one type of product or services. In short, a static descriptor is the same for every transaction processed through a given merchant, shows up after a transaction, is settled and displayed on the statement permanently.
Static descriptors usually consist of two elements, such as DBA (doing business as) name and contact information. The DBA name should have less than 22 characters and the contact information must be shorter than 11 characters.
Here’s an example of a static descriptor:
COMPANYNAME 123-123-1234 ZIP CODE UK.
On the other hand, dynamic descriptors are used to describe a specific product or service. In this case, the description of each transaction changes to match the item or service purchased. This means that a dynamic descriptor vary depending on the product and it is configured for each transaction via the API, at the time it is being processed.
We recommend you to use dynamic descriptors wisely, especially when you run a bookstore or sell mobile applications. We all know how diverse book titles or app names can be, so it can cause inconvenient situations.
There’s also another type — a Soft (or Pending) descriptor which is displayed after a transaction has been authorized but is not yet captured. A customer can see it when the charge has a pending status. The content displayed is usually the same as for the static descriptor, but some issuing banks display the payment service provider name instead of the merchant’s name. Note that pending transactions can’t be disputed.
What Should Be Included in a Merchant Descriptor?
Note that providing a descriptor doesn’t always mean that consumers will recognize transactions at a glance. There are various ways to optimize what will be displayed on a bank statement, so it’s good to know the best practices. These are following:
Provide a descriptor that makes it easy to identify the purchase, with a name that will be recognizable to your customers. Keep in mind that your customers don’t always know the full name of your company. This is why it’s better to use brand or trading name, especially when your legal company name differs from the name of the service you offer.
For instance, when you run a bookstore which is named ‘Bookworm’, but your company is registered as ‘BKM, Inc.’, the main company name won’t help your customers to find out what they paid for. To make it clear, your description can look like this: ‘BOOKWORM YOURWEBSITECOM 111-222-1234’.
Using the brand name as a descriptor makes it easier for customers to recall the transaction. Also, it’s good to use the product name in some cases, especially when it’s completely different from the brand name.
You should also resign from the additions like “Inc.” or “Ltd.”, as it doesn’t provide any added value for your customers.
Place contact information on the descriptor to make it easy for your customers to contact you in case they don’t recognize the purchase. It can be, for instance, an email address or a phone number.
By adding contact details, customers can contact you when they can’t recognize the transaction. In most cases, it can help prevent disputes initiated by customers. So, you have a chance to resolve the issue before a chargeback happens.
You can also put your website address, which is a great idea when it comes to online shopping.
What’s more, a good practice is to keep your customers informed what they can find on their bank statement, by displaying a proper note during your checkout process or in a purchase confirmation email, to clear up any confusion.
In an ideal world, the descriptor contains:
Understand a Customer’s Perspective
The way a customer sees the descriptor is determined by their issuing bank, but it usually comes as the following: COMPANYNAME 123-123-1234 ZIP CODE UK or COMPANYNAME COMPANYSITECOM ZIP CODE UK.
In general, it’s good to keep descriptors short and simple, as some banks may display only part of it. It’s important, because when a cardholder reviews their statement and sees the transaction that they can’t recall (because of a poor descriptor), it can lead to a chargeback.
Of course, there could be various circumstances regarding the unrecognized transactions. For instance, when a cardholder gives their card to a family member and after some time, when reviewing a bank statement, they couldn’t recall the purchase. In this case, a cardholder could have a problem with recognizing the purchase, even if the descriptor consists of clear information. Bearing this in mind, do as much as you can to avoid a situation when a genuine customer has a problem with recalling a purchase.
It’s a common truth that when the billing descriptor contains enough information, it’s a perfect reminder to the cardholder of what and where it was bought. Remember that what is displayed on a cardholder’s statement, is critical to reduce the number of unrecognized chargebacks.
A Quick Reminder
If you have any further questions about transaction descriptor, contact us via email. We’re always happy to help!
Latest posts by Sandra Wróbel-Konior (see all)
- Payment Podcast: The Biggest Challenges in the Payments Industry and Solutions for Merchants - September 1, 2020
- COVID-19’s Impact on the Online Payment Industry - August 12, 2020
- The Challenges of Gaming Payment Processing - July 28, 2020