A merchant’s “descriptor” is the description of the transaction that shows up on the customer’s credit card statement. Usually it includes the name and phone number of the business.
Typically the merchant’s descriptor is defined on the merchant account application and stored in a static field at the credit card processor / merchant acquirer (some examples are to the right – my amex bill).
Having that a static descriptor can result in increased chargebacksmerely because customers don’t recognize a completely legitimate charge on their bill (for example, 37signals had such a problem, which they partially solved without dynamic descriptors). You can reduce chargebacks by using a dynamic descriptor that changes based on the circumstances of the transaction, such as where it occurred or what product was purchased.
For example, the Amazon transaction on my credit card statement could say that it was for S3 and the Parking Meter transactions could tell me what street I parked on, to ensure that I recognize the transaction.
To use dynamic descriptors you need a processor that supports them and a gateway that supports them and the two need to communicate to pass the data correctly.
Comparison shopping on your own for processors that support dynamic descriptors is extra tricky, since it limits the number of processors you can work with. FeeFighters’ auction process allows you to filter by processors that support dynamic descriptors and can make your life a lot easier if you are searching for this capability.