Success in the eCommerce ecosystem is shaped by numerous elements. The humble billing descriptor — something which you might easily overlook — is one of the most important.
Findings from the 2023 Chargeback Field Report give us food for thought on the subject. The report shows that about one-third of cardholders confess to being confused by billing descriptors on their statements.
More intriguingly, about 75% of the merchants hadn’t even looked at how their billing descriptor is presented. This is something merchants can’t afford to do, though. Ignoring this seemingly small detail can snowball into a barrage of chargebacks, throwing a wrench in the works for businesses.
Why Descriptors Matter
Billing descriptors help guide consumers through their statements by identifying who is charging them, for what reason, and when. They’re essential for fostering trust and simplifying the statement-reading experience.
To that same end, an unclear billing descriptor can create multiple challenges:
- Customer Befuddlement: If a descriptor doesn’t ring a bell, customers are left scratching their heads, trying to recall the transaction.
- Chargeback Surge & Disputes: Mystery transactions can be mistaken for fraudulent activities, leading to chargebacks. This erodes revenue and also brings added fees.
- Tarnished Brand Image: Continuous confusion around billing can paint a business in a less-than-flattering light, deterring potential future interactions.
The ramifications differ based on business size and type. A mom-and-pop shop that does little or no business online might brush this off. But, it can be a significant hurdle for expansive online entities or those offering a myriad of products.
A Closer Look at the Issue
Let’s consider some more revelations from the Chargeback Field Report. About 27% of merchants were clueless about their billing descriptor’s whereabouts. Alarmingly, 47% admitted to never verifying theirs.
Such oversights can be costly, especially when Visa and Mastercard have clear thresholds for monthly chargebacks. Crossing these lines can push merchants into the “high-risk” bracket, meaning they incur steeper penalties and fees.
A typical scenario sees customers, puzzled by a charge on their statement, approaching their banks. This often ends in a chargeback, even if the transaction was legitimate.
Remember earlier when we discussed the fact that one-third of respondents said they were frequently confused regarding billing descriptors? Only a slim 6% claimed to never experience any confusion regarding billing descriptors. In other words, 94% of buyers were confused at least some portion of the time, and each instance of confusion surrounding descriptors can mean a chargeback.
Dynamic Descriptors to the Rescue
Dynamic descriptors are the industry’s answer. They empower merchants to tweak billing descriptors per transaction through an API. Dynamic descriptors can highlight specific purchase details, ensuring no ambiguity.
Depending on the processor, there’s a range from soft dynamic descriptors to a mix of soft and hard ones. Additionally, a combination of a static prefix with a dynamic suffix offers another layer of clarity. This combo is often called a “shortened” descriptor.
Dynamic billing descriptors can be game-changers, especially in the context of chargebacks. Specifying transaction details on statements can provide merchants with numerous benefits:
- Clearer Identification: Laying out transaction details reduces the chances of customers overlooking or misunderstanding charges.
- Transparent Communication: Offering insights into the nature of the purchase ensures transactions aren’t lost in memory.
- Real-Time Adaptability: The ability to edit descriptors on-the-fly allows merchants to cater to each transaction’s nuances.
- Prompt Customer Support: Embedding contact details facilitates faster resolution of queries, minimizing chargeback occurrences.
- Industry-Specific Tailoring: Adapting descriptors to align with a business’s operations ensures clarity and minimizes potential hiccups.
Dynamic billing descriptors aren’t just a feature; they’re a shield against revenue leakage. By minimizing ambiguity and promoting clear communication, merchants can both lower their chargeback rate and also elevate the overall experience they provide to customers.
