Most avoidable transaction disputes start in the transaction feed. A customer sees a vague merchant name, lack of location, a broad category or a delayed update and can’t answer the obvious question: did I make this payment?
If the app doesn’t provide enough context, the safest action can feel like raising a dispute, increasing the bank’s operational expenses (opex) and taking time away from the customer.
That is the commercial problem behind transaction confusion: the data may technically be correct, but it doesn’t match how customers remember spending, with an average investigation causing an opex spend of £7.20 per dispute.
Generally speaking, helping customers recognise spending in their banking app requires richer transaction information. But nine key gaps often stop customers from recognising their transactions, and there are preventative actions banks can take to close them.
We’ve grouped them into three main areas:
- When vague merchant data causes transaction confusion
- When inaccurate context causes the issue
- When timing issues impact recognition
When vague merchant data causes transaction confusion
When categories are too broad, merchant names don’t exactly match, or payment processors are reflected in banking app statements, customers are more likely to query their spending.
Known as the transaction dispute tax, Moneyhub estimates that for every 100,000 disputes, the bank’s back office costs total around £800,000. With 324 million chargebacks expected to be processed globally by 2028, the impact of better data cannot be understated.
For banks, the most advanced categorisation and enrichment systems must do the heavy lifting, providing the right context to make transactions instantly recognisable (or not).
1. The merchant name is too vague
Any ambiguity within the merchant name can make a legitimate payment look unfamiliar. One of the most common manifestations of this issue is in the form of abbreviations, but companies whose legal entities show up instead of their highstreet trading names also cause confusion.
This can turn even the simplest lunch purchase into a search and rescue exercise:
- the customer remembers the café, but the app shows the registered company name
- they search their inbox for receipts
- they check the date against their calendar
- they ask family members if anyone used the card
- they contact the bank because the transaction still feels suspicious
Merchant normalisation, the process of cleaning raw merchant data so the customer sees the business name they recognise, is the most important factor for banks when merchant names are coming through the banking app as vague. Accurate merchant identification and normalisation can be the difference between presenting an unfamiliar abbreviation versus the actual store name, causing fewer avoidable investigations for the bank.
2. The customer sees the trading name, not the brand they remember
Some businesses trade under names that don’t exactly match the brand customers see on the shopfront, website or receipt.
For example, a customer may buy from a local café called The Green Room, but the statement shows Green Hospitality Services Ltd. The payment is genuine, but the name on the banking app does not match the customer’s memory of the purchase.
This kind of brand-name mismatch often appears in:
- hospitality groups
- franchises
- marketplaces
- delivery platforms
- small businesses
- subscription services
- local traders using a different registered company name
The recognition task becomes harder because the customer has to connect three things at once: the brand they remember, the business name shown by the bank, and the amount that has left the account.
That extra work affects more than user experience. It increases support contact, slows self-resolution and makes legitimate transactions more likely to be challenged.
Banks reduce brand-name mismatch in their app transactions by showing clearer purchase details: recognisable brand names, logos, categories and, for in-person card payments, geolocation context where it is available.
3. The parent company appears instead of the branch or business
Parent-company confusion happens when the bank shows the corporate owner, but the customer remembers the branch, venue, app or service they actually used. This is common where one group owns many customer-facing locations or brands. Hotel groups, restaurant chains, transport providers and subscription businesses can all create this gap.
The problem becomes sharper when the payment settles days after the purchase. By then, the customer may remember the place they visited, but not the wider group behind it. This only results in more operational work for the bank, including more:
- customer service calls
- dispute attempts
- card freezes or replacements
The opportunity for financial institutions is to make transaction data reflect the customer’s memory of the purchase. The solution usually lies in presenting the branch, brand, location or logo, so that the customer can resolve their questions before it reaches support.
4. The payment processor is shown instead of the true merchant
When the banking app surfaces the payment intermediary instead of the business the customer chose to pay, customers struggle to connect the two, making transactions appear suspicious.
Our data science team found a real-life example of this very issue before the data was properly enriched. The raw transaction data showed SQ *HOLISTIC HLTH 020-8123-4521, lacking clarity for a consumer. After enrichment, the true merchant was found: Square payment to Riverside Physiotherapy Clinic, London.
By surfacing the wrong insight, the bank also detracts away from ongoing journeys, like:
- Customer segmentation
- Purchase analysis for budgeting
- Cross-sell or upsell programs
The Cardholder Dispute Index found that confusing billing descriptors remain a material driver of chargebacks for UK merchants. To prevent this issue, banks require a better merchant identification system that can determine the true counterparty from a third party.
When inaccurate context causes spending recognition issues
The next group of issues revolve around the rest of the data found in the transaction – the categorisation and geolocation that banks present to provide more insight around a customers’ spending.
5. The spending category is wrong
Transaction categorisation errors take extra clues away from the customer.
For example, when the transaction shows up as ‘utilities’ after the customer visits a farmers market stall called ‘Cooking on Coals’, they’re not only likely to be confused, but also lose trust in the accuracy of the bank’s app.
While one error doesn’t usually make a huge difference, inaccuracy in categorisation compounds over time to make the consequences much worse for financial institutions:
- Spending insights become less useful
- Affordability checks may miss the customers’ real commitments
- Product recommendations can be based on the wrong assumptions
- Support teams have less useful context when the customer reaches out
Greater granularity in a bank’s categorisation taxonomy reduces this data gap. More detail, a higher number of categories and an increase in the levels of parent-child categories are all helpful in eliminating this type of error.
6. There is a lack of useful location context
Transaction geolocation helps customers recognise card-present payments by showing where an in-person purchase took place.
It’s useful when the customer uses their card in a physical location, such as a shop, restaurant, petrol station, hotel or transport hub. For these payments, geolocation can be the detail that turns a suspicious-looking transaction into one the customer remembers.
Geolocation matters most when:
- the merchant name is unfamiliar, but the place is recognisable
- the customer was travelling and needs a location clue
- the payment settled after the purchase was made
- the branch name differs from the corporate name
- the customer made several similar payments in one day
By providing a familiar map view to the customer, institutions help them to realise that they were or weren’t in the area with confidence. Organisations that include this detail in their banking apps avoid many of the preventable transaction disputes that cause higher opex spend – it has made a notable difference to the financial institutions, including Tier 1 banks, that Moneyhub works with.
At Moneyhub, we provide transaction categorisation and enrichment combining the highest level of accuracy across merchant identification, categorisation and geolocation so that sparse transaction data becomes easier for customers and banks to understand.
When timing causes transaction confusion
The final problems revolve around when the customer sees the explanation – as often it’s too mistimed with customer spending or expectations.
Even when a transaction is genuine, correctly authorised and linked to the right merchant, queries can arise when it appears too late or if the customer isn’t expecting it. Memory fades quickly, which is why timing matters so much. The closer the accurate transaction display sits to the spending, the easier it is for customers to recognise.
7. Enrichment happens too late
When enrichment is batched, customers are often forced to sit with a ‘first draft’ version of their transaction in-app. The banking app might show a level 1 (general) category, merchant string and purchase amount until the transaction is properly enriched, hours later. This gap gives the customer enough information to worry, but not enough to recognise the transaction.
Enrichment speed also becomes relevant for faster transaction fraud detection.
This is where the Moneyhub transaction-notification framework comes in handy. It’s the idea that banks should forego batch-processed enrichment for real-time categorisation and enrichment, creating the opportunity to send a spending notification as it happens:
| Customer is shopping | Customer is not shopping | |
|---|---|---|
| Spending notification received | Customer is reaffirmed that you’re providing a high-quality service. | Customer suspects fraud and immediately raises a dispute – helpful for your team as the probability of false positives is low. |
| No spending notification received | No news is bad news. Customer is left to wonder when the transaction will clear their account, and doesn’t have a clear view on upcoming spending commitments, general budget or potential fraud. | Customer has an up-to-date view of their bank account and upcoming spending commitments. |
To learn more about this and compare Moneyhub with other providers, we recommend you check out the Categorisation and Enrichment Engine.
8. Free trials turn into paid subscriptions
Subscription-renewal confusion happens when a customer forgets that a free trial has become a paid service. Again, despite the payment being legitimate, it’s unexpected for the customer, and this shock can manifest in a dispute or chargeback request.
A typical pattern looks like this:
- the customer signs up for a free trial
- the trial renewal date sits weeks later
- the first paid subscription appears under an unfamiliar merchant name
- the category gives no clear clue
- the customer doesn’t connect the payment to the original sign-up
The fix here is in timely nudges, which financial service providers can use to warn customers before the upcoming payment leaves their account. It sends a reminder to help the customer cancel if needed, and provides extra context to help avoid unnecessary disputes.
9. Pre-authorisation holds look like unexpected charges
Finally, issues in transaction recognition can occur when a temporary hold looks like a completed or duplicated payment. In industries like car hire, hospitality and travel, where pre-authorisation holds are more common, the hold can cause one of a number of issues, such as:
- appearing before the final amount settles
- sitting as ‘pending’ for longer than expected
- differing from the final payment amount
From the customer’s point of view, it can look like the merchant has charged them twice or taken the wrong amount.
A clear payment status helps reduce that confusion. When the banking app shows that a payment is pending, held, adjusted or released, the customer has a clearer reason not to assume fraud.
Reducing transaction disputes starts with clearer data
The main reasons for transaction confusion are as not opaque as they once were. Now that the industry has access to better technology, we know that customers need to see the merchant they recognise, the category that matches what they bought, and the context that helps them place the payment quickly.
For banks, the customer recognition fix sits in better transaction data:
- normalise merchant names so customers recognise the business
- show the true merchant rather than a payment processor where possible
- use clearer categories, not broad or misleading labels
- add logos, location and payment status where they help recognition
- enrich transactions as close to real time as possible
- use nudges for subscriptions, free trials, pending payments and unusual activity
About Matt Barr
Matt Barr is a Product Director here at Moneyhub. He’s been working either with or for banks since the mid-00s, solving all manner of problems. From ISA transfers to corporate actions, Matt now focuses on transaction categorisation and enrichment. When he’s not solving client problems, you can find Matt buried under his children’s laundry or stomping through the Peak District.
FAQs
A ghost transaction is usually a pending, delayed, duplicate-looking or pre-authorised payment that appears unfamiliar to the customer but may still relate to a genuine transaction.
Transaction risk is the chance that a payment creates financial, operational, fraud or customer harm because the transaction is suspicious, unclear, miscategorised or not properly understood.
Consumers struggle because banking apps display complex, raw Merchant IDs instead of recognisable business names. This high cognitive load creates anxiety, often leading the customer to fear fraud and call customer support.
The issue stems from the gap between the bank’s raw data and the customer’s mental model. Raw data contains strings of digits and abbreviations that hold no meaning for the user, resulting in a perceived risk. By failing to enrich this data with clear merchant names, logos, and locations, the bank forces the customer to do the verification work, creating a frustrating, high-friction experience.
Transaction enrichment reduces avoidable disputes by giving customers clearer details at the point of doubt, including the merchant name, logo, category, payment status and location where available.
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