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May 24, 2022
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Making Sense of Messy Merchant Data with Artificial Intelligence

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Chief AI for Everyone Officer

We’ve all encountered a transaction (or ten) on our bank statements that we don’t recognize. Worst case scenario, these could be fraudulent charges. However, it's also possible that we just aren’t recognizing the merchant name from the billing description shown on the statement. 

It is common for charges on bank statements to show billing descriptors that are confusing or completely unrecognizable. While some merchants use clear names, many simply don’t. This article explains why merchant descriptors can be so perplexing, how artificial intelligence can be used to automatically disambiguate merchant IDs, and the benefits of turning messy payment data into clean transactions for both cardholders and card issuers.

Why are some transactions unrecognizable on statements?

Whenever we use our credit or debit cards to make purchases, the transactions are stored by the card issuer on the cardholder’s statement. The billing descriptor, sometimes called merchant descriptor or merchant ID, is the name that appears on statements. Ultimately, human error is to blame for unclear billing descriptors on bank statements.

Although there are best practices for the information to include in billing descriptors (e.g., trade name instead of legal name, location, and phone number) many businesses don’t follow them. As a result, we often see descriptions on bank statements formatted like this:

bad billing descriptor example

At a glance, this may not seem like a particularly complex or significant problem. However, when we consider how many businesses there are and the infinite number of ways each one can choose to format their billing descriptors, it becomes clear how difficult this issue is to solve. Additionally, unrecognizable transactions pose legitimate problems for both card issuers and cardholders, leading to:

  • Transaction disputes and chargebacks.
  • Increased customer service calls due to unrecognized transactions.
  • Poor digital banking experience.

Using AI to automate billing descriptor disambiguation

Unrecognizable merchant names would be a thing of the past if every merchant standardized their billing descriptors. Unfortunately, this would require nearly impossible amounts of coordination between businesses and payment network operators, including reformatting all existing billing descriptors that don’t include the common elements mentioned above.

Fortunately, artificial intelligence (AI) makes it possible to identify hidden patterns buried in unstructured billing descriptor data, then automatically transform unrecognizable merchant names into clear transaction records. Although this problem could be approached in a number of different ways, the following is a high-level description of how super.AI uses artificial intelligence to unscramble billing descriptors:

Before and after AI-powered merchant name disambiguation

By using artificial intelligence to unscramble messy merchant records, card issuers and payment network operators can create an obviously better user experience that results in less headaches for everyone involved. The following illustration depicts how a transaction record in a mobile banking application would look before and after billing descriptors were cleaned using AI:

Benefits of automated merchant name disambiguation

Both card issuers and cardholders benefit from having easily recognizable merchant names attached to each transaction. Some benefits include:

  • Fewer customer service inquiries: Card issuers can reduce the number of customer service calls they receive about charges cardholders don’t recognize.
  • Fewer payment disputes: Card issuers can expect fewer payment disputes, as cardholders are more likely to recognize the transactions on their statements.
  • Lower operating costs: Card issuers can save money on operating costs thanks to fewer customer services inquiries and payment disputes.
  • Clearer statements: Cardholders can better understand their bank statements and feel more comfortable when reviewing their transaction records.
  • Better customer experience (CX): Cardholders can save time by avoiding transaction disputes thanks to fewer unidentified merchants.

Additional artificial intelligence resources

At super.AI our mission is to make artificial intelligence more accessible, and to automate repetitive tasks so that people can focus on the work that matters. We take this approach in everything we do and strive to create useful resources that empower people to learn about and leverage AI. For more information or help getting started on your AI journey, check out the following resources:

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