Receiving a chargeback is one of a merchant’s worst nightmares, and the reason why it happens is because a customer does not recognize the merchant’s business on their credit card statement. They can’t remember who was it who charged them, or what they bought, for that matter. It’s like someone coming up to you, asking for a debt to be paid out – only for you to stare blankly at the person because you can’t seem to remember, or even know who he is!

As a result, the customer reports this matter to the credit card companies and the merchant will be issued a chargeback. In some rare cases, especially when American Express cards are concerned, chargebacks are issued even when a customer did not ask for one. As far as merchants know, AMEX have been very strict on their chargeback policies and merchants often have no say even when customers want the chargeback reversed.

So what can a merchant do to counter this problem? For starters you should take a look at your descriptor. A descriptor is the name or phrase the customer sees upon receiving their credit card statement. Normally a merchant’s business name (DBA) is used as part of the descriptor, but there is a limitation to how much one can squeeze into the descriptor space.

The solution to this is simple: merchants may choose to use a domain name as his descriptor, allowing customers to remember that they’ve indeed made a purchase with this particular merchant.

Merchants should also avoid operating more than one type of business for the same merchant account or even sell vastly different types of products. Instead they should know that a unique merchant account for each website they start will greatly minimize the chances for chargebacks to be issued.

Finally, merchants can take precautions by registering a domain related to their business or product name, redirect it to a particular webpage that explains the charge to customers, and other details meant to jog their memory in case they have forgotten. A good example can be found here.

It can take only a few minutes or an hour to start looking at your descriptor and make changes that will result in your chargeback decreasing. There’s no better time like the present.

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