Every time a customer completes a transaction on your eCommerce store using their credit or debit card, a record of that sale appears on their bank statement. This record is shown as a short description – the so-called billing descriptor. In this way, your customers can easily identify who charged them and the total amount of their purchase.
In this article, we’ll delve into what billing descriptors are, their main types and why they’re important. We also look at how merchants can improve their use of billing descriptors to offer a seamless and secure payment experience.
What is a billing descriptor?
A billing descriptor is a short text appearing on a customer’s bank statement to identify a specific transaction or business. Billing descriptors are also known as a merchant descriptor, billing name or statement descriptor. Businesses typically define billing descriptors when they set up their merchant accounts. These descriptors can stay consistent for every transaction. Also, descriptors are established on a per-account basis. Each merchant ID (or MID) has its own descriptor. So, if a business has multiple MIDs, they may have multiple different billing descriptors.
Billing descriptors serve as an indication of a charge, while they provide context to the cardholder about their transactions. This, in turn, allows customers to recognise the transaction and understand its origin.
Types of billing descriptors
Your billing information should include, aside from the company name, your phone number and business location on your customer’s statement. This enables the customer to contact you directly upon suspicion of a fraudulent transaction rather than their issuer. This can be presented in four different types of billing descriptors:
Soft descriptors
A soft descriptor appears on a customer’s bank statement shortly after their issuing bank authorises a transaction. In essence, soft descriptors act as a placeholder that designates a pending transaction that will be replaced once the transaction is settled.
Hard descriptors
A hard descriptor is the permanent merchant billing information that replaces the soft descriptor on the customer’s statement. The settlement of a transaction can take a few days, but once it settles, the hard descriptor will appear on the customer’s bank statement.
Static descriptors
A static descriptor is the same for all customers’ bank statements independent of their individual purchases. The term can refer to the entire statement descriptor or just the first part (i.e. the prefix).
Such descriptors would be a better fit for businesses that sell a single product or service, or a limited selection of items. The caveat about static descriptors is that there’s no guarantee that customers will recognise whom they paid and why – something that might increase the likelihood of a chargeback.
Dynamic descriptors
A dynamic descriptor involves the suffix of the descriptor, which changes based on the properties of a purchase. This is a customised billing descriptor that you’ll need to configure using an API for every individual transaction, so it's best to consult your payment service provider. For example, a dynamic descriptor can provide individual transaction details, such as:
- The product name and category
- The date and time of purchase
- The order identification number
Dynamic billing descriptors are more detailed than static ones as well as being unique for every individual transaction, which can be applied as a fraud prevention strategy (watch our video where we drill into tactics on how to efficiently mitigate the risk of fraud for online payments). Dynamic billing descriptors are commonly used by payment facilitators or merchants that operate many different brands under one hat.
Billing descriptors vs Payment Reference Number – what’s the difference
A payment reference number (PRN) is a combination of random letters and numbers that helps identify transactions. PRNs also apply to both card payments and bank transfers. The main difference between the PRN and the billing descriptor is that the PRN isn’t a recognisable text but random characters, whereas the billing descriptor is a text designed to be easily read and recognised.
Additionally, PRNs serve a different role than billing descriptors. When a customer reviews their card statement and looks at the payment reference, it does not reveal the bought item or the business it was purchased from. This is a function of the billing descriptor. However, customers can use PRNs when discussing a particular transaction with their bank.
With the blend of billing descriptors and payment references, customers have the necessary information to identify a transaction and contact their issuer to raise any concerns.
Why billing descriptors are important for chargebacks
The billing descriptor is important for chargebacks for one simple reason. If the descriptor clearly identifies a transaction when your customer checks their account statement, they’ll know and accept the charge. If, however, the descriptor is confusing or hard to identify, the customer might suspect fraudulent activity, and this could spur them into filing a dispute or chargeback with their issuer.
When it comes to the merchant, combatting chargebacks can be an expensive and time-consuming process, even if they succeed in proving that the charge is valid. That’s why it’s so crucial to have a billing descriptor that minimises the risk of confusion.
If you want to find out everything you need to know about chargebacks, watch our video here.
Formatting requirements for effective billing descriptors
When creating your billing descriptor, you should consider the following factors:
- The product name and category
- The date and time of purchase
- The order identification number
- Aim for a billing descriptor that’s between five and 22 characters long (if the descriptor contains a static prefix and dynamic suffix, as explained above, the prefix must be two to 10 characters long)
- Add at least one (Latin) letter in your prefix and/or suffix
- Avoid the following special characters: \ ‘ “ *
- Include more than one common term relevant to your business or your website URL
Tips on how to optimise billing descriptors to prevent chargebacks
Improving your billing descriptors by applying the best practices we outline below is the easiest and most strategic way to reduce the chances of a chargeback.
Make it simple
Offer your customers a clear and concise reminder of their transactions. Sticking to an easy-to-understand format for your billing descriptor may help avoid confusion that could be detrimental to your revenue and reputation. You may consider adding your website domain name and, if using a dynamic descriptor, a brief description of the item(s) bought.
Use your trade name
Many companies have a legal name that’s on their documentation and a separate name for public use that they share with their customers (e.g. Amazon.com). Customers may not be familiar with your legal name, so, if you can, use your common trade name.
Add a phone number and website
It’s useful for your customers to view your customer service line on the billing descriptor, so they can contact you directly in case they have questions about a charge. Adding your website, if you’re an eCommerce merchant, may also be useful as the consumer may recognise your brand more easily this way.
Display product information
It can be helpful to offer specific details about the product or service a customer has bought, such as product names or subscription details. On top of this, including a code or category that points to the type of product or service purchased, such as “Online Shopping.” This can provide further clarification about the payment and mitigate the chance of disputes.
Don’t include location
For eCommerce brands, adding the city, state or country where the transaction took place can be confusing for the consumer. Instead, it’s recommended to include the website domain, as it can help customers link the charge to a particular purchase.
Test your billing descriptors
Testing billing descriptors might help merchants better understand the customer’s point of view and ensure their descriptor makes sense. You can use test credit card numbers to perform test transactions to confirm that the billing descriptor presented on bank statements is as intended.
Update in real-time and respond to trends
If a merchant applies a dynamic billing descriptor, updating them in real-time to reflect any potential amendments to the payment is key. This assures the customer that what they see is the most accurate and up-to-date information. Furthermore, analysing chargeback data to pinpoint trends and resolve any recurring issues is an important practice. This is because it’ll give businesses insights to help adjust their billing descriptors to lessen the likelihood of more chargebacks in the future.
It should also be noted that card schemes may require some businesses to register all descriptors with them in advance. This is a common practice to ensure compliance and mitigate the potential of fraud or misuse of payment descriptors. However, specific procedures may differ between card schemes, so it’s crucial for these merchants to confirm relevant registration guidelines with their card scheme(s).
How emerchantpay can help
Understanding that your business is represented across all forms and channels, from billing descriptors to brand image and ensuring it’s consistent throughout is paramount to sustainable business growth.
At emerchantpay, we’re dedicated to empowering our merchants to design smooth and secure payment experiences. Part of this experience is a properly crafted billing descriptor that’s visible and familiar on your customer’s bank statements. Our team is armed with anti-fraud protection tools and robust chargeback management capabilities that can support you in reducing the threat of chargebacks.
If you’re interested in finding out more about billing descriptors, contact our team of payment specialists today.