ACH/E-check Returns

What is an ACH/E-check return?

Unlike credit cards which are real-time authorizations, ACH/E-check is a batch store forward system - meaning an approval on the screen does not validate the account information or the availability of funds in real-time. The activity for that day is batched and sent to the applicable financial institution. Once received the financial institution verifies the validity of the funds/information provided. If it is found not to be valid, they will submit an ACH/E-check return - this can take quite a bit of time depending on the return reason and financial institution.

If you are unsure what the return reason is for a specific payment, please go to your Payments Portal via Payments Portal under Payments. Once logged in, select Payment Returns on the left to see a list of returned ACH/E-check payments and their associated return code.

Tip: ACH/eCheck return fees incur a $5 fee per occurrence - this could be charged to the customer when re-collecting payment.

For more information on the return reasons and the next best steps, please see the below table.

Code Reason What does it mean? What to do?
R01 Insufficient Funds The available and/or cash reserve balance is not sufficient to cover the dollar value of the debit entry. Request the customer to re-attempt and/or provide a different form of payment.
R02 Account Closed The previously active account has been closed by the action of the customer or the financial institution.  Contact the customer for a different bank account or another form of payment. If you have not yet shipped the goods or provided the services covered by the payment, you may want to wait to do so until you have confirmation of a settled payment.
R03 No Account/Unable to Locate Account The account number structure is valid and it passes the check digit validation but the account number does not correspond to the individual identified in the entry, or the account number designated is not an open account. Contact the customer and ask them to re-enter their payment information using the correct bank account, routing number, and name on the account at their Financial Institution or another form of payment. If you have not yet shipped the goods or provided the services covered by the payment, you may want to wait to do so until you have confirmation of a settled payment.
R04 Invalid Account Number The account number structure is not valid. The entry may fail the check digit validation or may contain an incorrect number of digits. Have the customer resubmit with their correct account number.
R07 Authorization Revoked by Customer (adjustment entries) The Customer/ Consumer, who previously authorized ACH payment, has revoked authorization from Originator (must be returned no later than 60 days from the settlement date and the customer must sign an affidavit). Request a different form of payment, or ask to debit a different bank account.
If you need to debit the same bank account, instruct your customer to call the bank and remove the block on transactions.

Unfortunately, there is no dispute resolution available to you within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was properly authorized, you will need to sue your customer in Small Claims Court to collect.
R08 Stop Payment A stop payment has been placed on the payment Contact your customer and resolve any issues that caused the transaction to be stopped. If they will be using the same account information, the stop payment will need to be removed from their account prior to resubmission.
R10 Customer Advises Not Authorized The customer has advised their Financial Institution the debit to their account was not authorized by them Request a different form of payment, or ask to debit a different bank account.
If you need to debit the same bank account, instruct your customer to call the bank and remove the block on transactions.

Unfortunately, there is no dispute resolution available to you within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was properly authorized, you will need to sue your customer in Small Claims Court to collect.
R16 Account Frozen The funds in the account are unavailable due to specific action taken by the RDFI or by legal action Obtain a different form of payment.
R29 Corporate Customer Advises Not Authorized The corporate customer has advised their Financial Institution the debit to their account was not authorized by them Request a different form of payment, or ask to debit a different bank account.
If you need to debit the same bank account, instruct your customer to call the bank and remove the block on transactions.

Unfortunately, there is no dispute resolution available to you within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was properly authorized, you will need to sue your customer in Small Claims Court to collect.
Was this article helpful?
0 out of 1 found this helpful

Comments

0 comments

Please sign in to leave a comment.