Paynetsecure Blog

A descriptor is identifying information about a merchant which appears on buyers’ credit card statements.  Descriptors remind cardholders of the details of the purchase and give buyers a way to contact the merchant.   It is advantageous to both buyers and merchants to use clear descriptors.

There are two major categories of descriptors: static and dynamic. Static descriptors, sometimes called hard descriptors, assign a single description and customer service number to all products and services.  Some merchant account providers allow only a single static descriptor to be used with each merchant identification number (MID).

Dynamic descriptors, also called soft descriptors, allow merchants to associate a distinct description and phone number with different products or services.  Dynamic descriptors give companies the option to use the name  of the product or service as the descriptor on the customer’s credit card statement.  This significantly reduces customer disputes and chargebacks.

Many companies offer a variety of products or services.   If a company name appears as the descriptor on customers’ card statement rather than the name of the product or service, the customer may not recognize the charge.   As a result, customer disputes/chargebacks occur because customers may not identify the company name with the specific product or service which was purchased.

This happens even if a company clearly advises the customer at the time of purchase of the name which will appear on the customer’s credit card statement.   Another common reason this happens is when the spouse who did not make the purchase handles the family finances.  The spouse may not recognize the name of company but would recognize the name of a product or service that was purchased.

Dynamic descriptors and phone numbers can help reduce the occurrence of customer disputes and chargebacks by clearly identifying the product or service on customers’ credit card statements.

For more information on payment processing visit paynetsecure.net

It’s sad, but true.  When it comes to chargebacks, the credit card companies are most often on the cardholders side, not the merchants.

There is a certain segment of cardholders know how to work the chargeback system in their favor.  Merchants can do everything correctly, follow all card association regulations and recommendations to the letter, and still get zinged big time for chargebacks.   Business segments classified as high risk merchants are more prone to chargebacks than others.

The card companies monitor all merchant chargeback activity on a monthly basis and alerts merchant banks in writing when any of their merchants has excessive chargebacks.  Chargebacks of 1% or higher are considered excessive.

The card companies consider the first notification of excessive chargebacks for a specific merchant a warning.  The banks impose large fines to merchants who do not take action within an appropriate period of time o return chargeback rates to acceptable levels.

Working with a high risk payment gateway can help control chargebacks.

The length of time merchants are given to comply almost never exceeds 3 months. By the 3^rd month card assess escalating fines to the banks beginning at $50 per chargeback.  Additionally, The banks are accessed an initial $5,000 review fee plus spiraling additional fines.  All fines are passed on to the merchant.

The bank can be audited by the card companies and may lose their acquiring  status.  With so much at risk, it’s no wonder that the banks will almost always terminate the merchant before they complete the 3^rd month of monitoring.

Once merchants are terminated, it’s very difficult for them to get another merchant account.  Any bank opening a new account for the merchant assumes the previous liability associated with that merchant.

The moral for this sad story is that merchants must do whatever it takes to keep chargebacks low.  A good payment gateway can help.