Wednesday, April 6th, 2011

How to Set Up and Manage Billing Descriptors

Tags: billing descriptor

How to Set Up and Manage Billing Descriptors


One of the most unnecessary and easiest to prevent types of chargebacks is the one initiated when a cardholder is not able to recognize a particular transaction on her monthly statement. If the transaction is legitimate, there is absolutely no reason why it should not be easily identified in good faith.


Unfortunately this type of chargeback is not a rare occurrence. Visa has a special code to designate it: reason code 75: “Cardholder Does Not Recognize Transaction.” In this article I will show you how to make your transactions easily identifiable on your customers’ statements and protect yourself against such chargebacks.

How Does Your Business Name Appear on Your Customers’ Statements?


The way your business name appears on a cardholder’s monthly statement and transaction activity log is managed by your credit card merchant services provider through a tool called “billing descriptor.”


The billing descriptor consists of your business name and phone number. Payment processing companies typically set it up using your “Doing Business As” (DBA) name by default, usually restricting it to 25 characters, excluding the phone number. Longer names are abbreviated.

Billing Descriptor Types


There are two types of billing descriptor:

  • Default billing descriptor. As the name suggest, this is the one favored by your processor. It shows the same information for all of your transactions. If you have it set up for your account, it will look something like this:


    UNIBUL MERCHANT SVCS 866-749-1405


  • Soft billing descriptor. This one allows for the description to provide a more detailed information about the transaction, in addition to the business name and phone number. Moreover, different types of transactions are described differently on the cardholder’s statement.


    This type of descriptor may be the better option for businesses with multiple product lines or service offerings, where the product’s brand name is more familiar to the consumer than the business’ DBA name. For example:


    UMS* VIRTUAL TERMINAL 866-749-1405
    UMS* PAYMENT GATEWAY 866-749-1405


    In these examples UMS* is the abbreviated name of the business and virtual terminal and payment gateway are the brand names of two its service offerings.



How to Set Up and Manage Your Billing Descriptor?


The first thing you need to do is decide which type of descriptor to use. For the vast majority of businesses the default type will do just fine. Remember, you have limited space to work with, so if you want to add additional information, you will have to abbreviate your business name.


Using the soft descriptor typically makes sense for large corporations, where multiple lines of product have been developed, branded and marketed independently and consumers may not be aware that there is a different legal entity behind each of them.


Whether you choose to go with the default or the soft descriptor, check with your processor to ensure that your business name is displayed correctly. It should be your DBA, which is how your customers know you, not your legal name. If abbreviated, make sure the name is recognizable or request an alternative abbreviation. Check the phone number as well and make sure it is accurate.


If your billing descriptor is correctly set up, you should never see another Reason Code 75 chargeback. Just be sure to update it every time there is a change in your DBA or customer service phone number.


Image credit: PGwire.com.

Tuesday, July 6th, 2010

How to Manage Chargebacks Caused by a Cardholder Non-Recognition of a Transaction

Tags: best practices, billing descriptor, chargeback reason codes, chargebacks

How to Manage Chargebacks Caused by a Cardholder Non-Recognition of a Transaction


Visa uses chargeback reason code 75 to designate chargebacks caused by non-recognition of a credit card transaction by the cardholder. MasterCard does not have an equivalent reason code.


Chargeback reason code 75 is issued when a card issuer receives a complaint from a cardholder stating that the name of the merchant that appears on the credit card statement is not recognized. This reason code applies to merchants operating in both card-present and card-not-present environment.


What causes these chargebacks? Most often the issue is that the credit card statement shows a name for the merchant that is different from the one the cardholder is familiar with, or it is completely unrecognizable.


How to manage this type of chargebacks? When you receive a reason code 75 chargeback, you will need to provide to your payment processor all available documentation or information that would assist the cardholder in recognizing the transaction. The time frame for your response is 120 days. For example:

  • Sales receipt.
  • Shipping invoice or delivery receipts.
  • Description of merchandise or service purchased.


How to prevent chargeback reason codes 75? Chargeback reason code 75 is perhaps the most easily remedied type of chargeback. The way to prevent it from occurring is to set up your merchant account‘s billing descriptor correctly.


The way your company’s name appears on your customer’s credit card statement is called a billing descriptor and is the single most important factor in cardholder recognition of transactions. The billing descriptor is typically limited to 25 characters, excluding the merchant’s customer service phone number. If your customer does not recognize your company’s name on his or her credit card statement, the transaction will most likely be disputed and result in a chargeback. There are two types of billing descriptors:

  • Default billing descriptor. Typically, your payment processor will use your “Doing Business As” (DBA) name in the billing descriptor field. If it is longer than 25 characters, part of it will be abbreviated. A default billing descriptor looks like this:


    ABC SERVICES 800-111-2345.


    The default billing descriptor is sufficient for the vast majority of businesses. Be advised, however, that processors can manage billing descriptors for Visa and MasterCard transactions (some can do that for Discover transactions as well). American Express, however, processes its own cards’ transactions and manages billing descriptors separately from Visa and MasterCard processors. American Express typically uses the merchant’s legal name as a billing descriptor, so if it is different from your DBA name, you may want to contact them and try to convince them to modify it.

  • Soft billing descriptor. We receive many inquiries about soft billing descriptors, although most often they are not really needed and can create unnecessary confusion. The soft billing descriptor allows the description field in the cardholder’s merchant account administration to be modified to include a more detailed description of the transaction. The merchant’s name is usually truncated to three letters plus an asterisk followed by a short description of the service or product being billed.


    Now, it may seem a good idea to provide more detailed information through a soft billing descriptor, however it is rarely needed. The purpose served by the billing descriptor is to enable a cardholder to recognize a transaction. That’s all. Most often, your DBA would do the job just fine. Soft billing descriptors should only be used by businesses that sell multiple lines of product, with strong brand recognition that is independent from the company’s name. In other words, if you sell multiple lines of product and your customers can recognize the names of your products, but not the name of your business, you should use a soft billing descriptor. So if you have two separate lines of product, your soft billing descriptor should be set up to show two separate messages in your customers’ credit card statements, depending on the purchase. For example:


    ABC* Killer Antivirus 800-111-2345.


    ABC* Assassin Spyware 800-111-2345.


    In these examples, ABC* is the abbreviated name of your business and Killer Antivirus and Assassin Spyware are the brand names of your two product lines. Your customers will easily recognize Killer Antivirus or Assassin Spyware, even though they may have no clue what ABC* is.


Image credit: Readthinkwriteteach.com.

Thursday, June 10th, 2010

Managing Billing Descriptors

Tags: best practices, billing descriptor, merchant accounts

Managing Billing Descriptors


The way your company’s name appears on your customer’s credit card statement is called a billing descriptor. The billing descriptor is set up and managed by your payment processor. When you first fill out your merchant account application, you provide both your “Doing Business As” (DBA) name and your legal business name. Typically, your processor will use your DBA name as a billing descriptor. However, you should not take this for granted and should always check the way it is set up. Moreover, American Express’ payment system is set up to use your legal name as a billing descriptor, so you should take this into consideration as well.


Billing descriptors are particularly important for businesses accepting payments in a card-not-present environment, where there is no physical interaction between the merchant and the customer. In order for MO / TO and e-commerce merchants to qualify for the lower interchange rate offered to merchants operating in a card-not-present (Visa: CPS, MasterCard: Merit 1), the business’ name and customer service number must appear in the billing descriptor field.


Billing descriptor types:

  • Default billing descriptor. If your company offers a single product or service, this descriptor would be sufficient. For example:
    ABC SERVICES 800-111-2345.
    This is the billing descriptor that your processing bank will set it up for you by default.
  • Soft billing descriptor. Some processors support a type of billing descriptor that allows the description field in the cardholder’s statement to be modified to include a more detailed description of the transaction. This is the soft billing descriptor type. The merchant’s name is usually truncated to three letters plus an asterisk, followed by a short description of the service or product that the business provides. Be advised that this field is usually limited to 25 characters plus the phone number. For example:
    ABC* Instant Oil Change 800-111-2345.
    If your business offers multiple lines of products or services, the soft billing descriptor may be a good asset to utilize. Be sure to check with your processor to see if they support this feature and for their format requirements.


It should be emphasized that for the majority of businesses, the default billing descriptor will be sufficient, regardless of the variety of merchandise. Convenience stores, for example, are well known to their customers by name, so there is no need to specify that the type of purchase is beverage, snack or something else. When your customer sees a charge on her statement from Pearl St. Convenience, she would immediately recognize it. If, however, you carry several lines of product, each with individual brand recognition, not related to your DBA name, you will probably need a soft billing descriptor. For example Symantec Corporation manufactures the Norton antivirus family of products, as well as other types of software. A customer who bought a Norton Internet Security package, however, may not know that, and if the billing descriptor shows Symantec, she may not recognize the charge.


Once you decide which type of billing descriptor is the best match for you, contact your merchant account provider and ask them to set it up that way. Some processors may have special requirements for the information that can be displayed, so you may have to be flexible. Yet, both your processor and you have an interest in setting up your billing descriptor in a way that makes it easy to identify a charge, because if your customer does not recognize your company’s name on his or her credit card statement, the transaction may be disputed and lead to a chargeback. Chargebacks are costly and everyone involved in processing them should try to keep them to a minimum.


Image credit: Webanywhere.co.uk.

Wednesday, June 9th, 2010

Billing Policy Guidelines for E-Commerce Merchants

Tags: best practices, billing descriptor, e-commerce

Billing Policy Guidelines for E-Commerce Merchants


E-commerce merchants should develop and implement a clear and detailed policy to communicate the terms and conditions of their billing procedures. You should clearly display on your website your billing policy to your customers at the time of purchase, and you should make it easily accessible on your website.


Your billing policy should provide the following information:

  • When your customers’ cards will be charged. When developing your billing policy, you should account for the industry rule that, in an e-commerce transaction, the transaction date is the date on which the merchandise was shipped, or the service provided. This means that you should not charge your customer’s credit card before you have shipped the product.
  • How the transaction will appear on your customers’ credit card statements. The way your transactions will appear on your customers’ credit card statements is managed through your merchant account’s billing descriptor. Contact your payment processor and make sure that your billing descriptor is set up correctly. This is especially important if your legal name is different from your DBA name. In such cases, consumers can easily get confused, as they can recognize your DBA, while processors typically use the legal name in the billing descriptor. If you are using a third-party billing company, inform your customers how the transaction will be described on their credit card statements (provide the third-party billing company’s name and the transaction amount).
  • Ask your customers to save a copy of the transaction for their own records. The transaction copy should provide information about your store’s policies so customers can refer to it when in doubt about a particular issue.


It is essential that you understand the importance of not charging your customer’s card before the product has been shipped. Cardholders today can review their transactions online in almost real time and, if they see a charge on their accounts without having received the item or at least a delivery notification, they are likely to contact their card issuer and dispute the transaction. Customer disputes and the resulting chargebacks are the number one reason why e-commerce merchants get into trouble with their processing banks. Processors are required by Visa and MasterCard to monitor their merchants’ chargeback levels and to ensure that they remain below 1 percent of the total number of transactions.


In case your store sells digital content, your policy should also incorporate the following best practices:

  • Do not charge your customers’ card accounts before the service is actually accessed on your website with the applicable password.
  • Avoid the use of negative renewal options or other marketing techniques that may create the false impression that the product is free.
  • Keep the sale’s terms and conditions clear and concise and communicate with your customers all special restrictions before the sale is completed.


Additionally, make sure that you include in your billing policy information about the transaction currency that will be used to complete the transaction. Remember that websites are accessible from all over the world and, unless you have decided against accepting international orders, your customers may be located anywhere. You should clearly state the currency, especially if it is not unique (a dollar may be Australian, New Zealand, Hong Kong or U.S.). Be advised that merchants cannot convert transaction amounts into different currencies. You may, however, display on your website equivalent amounts in different currencies, provided there is a clear notification that the conversion is for information purposes only. In order to further clear any currency confusion, you should provide on your website your place of business and your contact information.


Image credit: Dx3canada.com.