The Importance of Doing Business As (DBA) Names in Merchant Services

Doing-Business-As (DBA) names seem like a small detail in merchant services, but actually, the DBA name used by a merchant is very important and should not be selected haphazardly.

The DBA name is what is used for authorization and clearing and is considered the most important factor in cardholders recognizing transactions on their accounts. The name should also be consistent with the Merchant Category Code (MCC.)

Typically, the DBA name and customer service number are used as the billing descriptor. This is the way transactions appear on a cardholder’s statement. Billing descriptors are set by the payment processor and are usually 20-25 characters in length.

Types of billing descriptors:

Soft Descriptor:
This appears on the cardholder’s statement immediately at the time the transaction is initiated (based on the authorization.) If you subscribe to notifications from your card company, this, for example, would be the descriptor that appears in the notification when your card is first run at a restaurant or at a gas station for initial authorization.

Hard Descriptor:
This is the permanent descriptor that appears once the transaction is settled (the merchant batches out and the transaction is cleared with the card association.) In our restaurant example, this would be the way the complete transaction with tip appears on your statement.

Static Descriptor:
The same descriptor is used for all transaction types.

Dynamic Descriptor:
This can be used by merchants to customize the descriptor given the type of transaction. This is commonly used for merchants that sell various types of products and services, and want to offer a more specific description based on what was sold.

Why is it important that we get these right?
If a cardholder doesn’t recognize a transaction, they are more likely to charge it back, resulting in unnecessary costs and headaches for the merchant.

It’s common for ISOs and agents to run a test transaction when setting up a new merchant services account. This is a great time for payments professionals to check whether the descriptors assigned by the acquirer/processor are appropriate for the business.