Managing the risks of ACH payments
ACH payments are generally considered more secure than credit card payments because of their authorization and clearing process, along with bank fraud detection. However, unlike credit card transactions, ACH payments can take 1-3 business days to process.
During this processing time, issues like insufficient funds, authorization errors, or fraud can be discovered, potentially leading the bank to reverse the payment (an ACH return). This means you might not receive the payment even if the initial transaction seemed successful.
Here are some tips to minimize your risk.
Tips for minimizing risk for ACH payments | |
|---|---|
Create clear refund policies | Balance the desire for quick refunds (within 1-3 days of an ACH sale) with the higher risk of payment returns during this period. Consider waiting 3-5 days after the payment batch settles before issuing refunds, allowing the ACH transaction to fully clear and deposit into your account. |
Build strong customer relationships | Trust between you and your customers reduces the risk of fraud and errors. It also helps when dealing with situations where a customer might withdraw authorization during ACH processing. Customers with a positive payment history with your business are less likely to have returned payments. |
Monitor Transactions and Funds | Keep a close eye on incoming ACH payments and maintain a sufficient buffer of available funds before issuing any refunds. Because of the processing time, ensure the initial payment has fully cleared before refunding to avoid overdrafts or negative balances if a return occurs. |
How to handle an ACH return
If your bank payment fails (is returned), we'll email you. The email will include a return code and a brief explanation of why the payment didn't go through, along with instructions on how to fix it.
| If the returned payment has already been processed (settled), we will automatically withdraw the amount from your bank account. This will also be noted in the return email. |
Each return code has a specific meaning from the banking network that explains the failure in more detail. You can find a list of these return codes for both Canadian and US bank payments in the Bank Payment Return Codes section below.
Bank Payment Return Codes
US Return Codes
Return Code | Code Description | Additional Details |
|---|---|---|
R01 | Insufficient Funds | The available and/or cash reserve balance is not sufficient to cover the payment request. |
R02 | Account Closed | The bank account has been closed. |
R03 | No Account or Unable to Locate | The bank account appears to be valid but does not correspond to the individual identified in the payment request or the account number designated is not an open account. |
R04 | Invalid Account Number | The bank number account structure is not valid - may contain an incorrect number of digits. |
R05 | Unauthorized Debit to Consumer Account | This bank payment is not authorized by the customer. |
R06 | Returned per ODFIs Request | The bank of the merchant initiating payment has requested a return as erroneous. |
R07 | Authorization Revoked by Customer | The customer who previously authorized payments from their account has now revoked this authorization. |
R08 | Payment Stopped | The customer has placed a stop payment order on this payment which may be placed on one or more payment requests. |
R09 | Uncollected Funds | Although the ledger balance of the account indicates sufficient funds to cover the payment request, the available balance is not sufficient. |
R10 | Customer Advises Not Authorized, Improper, or Ineligible | This bank payment is not authorized by the customer. |
R11 | Check Truncation Entry Returned | No other return reason is applicable. Please reconfirm bank details with the customer |
R12 | Account Sold to Another DFI | Please reconfirm bank details with customer - this account may have been moved to another financial institution |
R13 | Invalid ACH Routing Number | Please reconfirm bank details with customer - invalid ACH routing number |
R14 | Representative Payee Deceased or Unable to Continue in that Capacity | Representative payee is deceased |
R15 | Beneficiary or Account Holder (Other than a Representative Payee) Deceased or Unable to Continue in that Capacity | Beneficiary or account holder is deceased |
R16 | Account Frozen/Entry returned per OFAC instruction | Access to this account has been frozen by either the customer's bank, legal action or OFAC. |
R17 | File Record Edit Criteria (Fields can't be processed by RDFI) | Information in the bank payment request can't be processed by the customer's bank. |
R18 | Improper Effective Entry Date (The effective entry date for a credit entry is more than two banking days after the banking day of processing as established by the originating ACH operator or the effective date is after the window of processing.) | Issue with date of payment - please try again |
R19 | Amount Field Error | Amount field is non-numeric, zero, or exceeding $25,000 |
R20 | Non-Transaction Account | Payment request was sent to a non-transaction account (where transactions are limited or prohibited). |
R21 | Invalid Company Identification CIE | Please reconfirm bank details with customer |
R22 | Invalid Individual ID Number | Please reconfirm bank details with customer |
R23 | Credit Refused by Receiver | Bank payment not authorized |
R24 | Duplicate Entry | Duplicate Entry |
R25 | Addenda Error | Addenda record indicator value is incorrect, with code invalid, out of sequence, or missing. |
R26 | Mandatory Field Error | Erroneous data or missing data in a mandatory field |
R27 | Trace Number Error | Original entry trace number is not present or does not correspond correctly in the addenda record on a return or notification of change entry. |
R28 | Routing Number Check Digit | Please reconfirm bank details with customer - invalid routing number |
R29 | Corporate Customer Advises Not Authorized CCD | Bank payment not authorized |
R30 | RDFI Not Participant in Check Truncation | Please reconfirm bank details with customer |
R31 | Permissible Return Entry - CCD or CTX entry that the ODFI agrees to accept | Please reconfirm bank details with customer |
R32 | RDFI Non-settlement | Customer's bank is not able to settle the payment request |
R33 | Return of XCK entry | Please reconfirm bank details with customer |
R34 | Limited Participation DFI | Customer's bank participation in ACH has been limited by federal or state supervisor. |
R35 | Return of improper Debit entry | Payments not permitted from requested account. |
R36 | Return of Improper Credit entry | Please reconfirm bank details with customer |
R37 | Source Document Presented for Payment ARC | Please reconfirm bank details with customer |
Less Common US Return Codes
The following return codes are less common but we have included them for your reference.
Return Code | Code Description |
|---|---|
R38 | Stop Payment on Source Document ARC |
R39 | Improper Source Document ARC |
R40 | Return of ENR Entry by Federal Govt |
R50 | State law Affecting RCK |
R51 | Item related to RCK Entry is Ineligible or RCK Entry is Improper |
R52 | Stop Payment on Item Related to RCK Entry |
R53 | Item and RCK Entry presented for Payment |
R61 | Misrouted Return |
R62 | Return of Erroneous or Reversing Debit --OR-- Incorrect Trace Number |
R63 | Incorrect Dollar Amount |
R64 | Incorrect Individual Identification |
R65 | Incorrect Transaction Code |
R66 | Incorrect Company Identification |
R67 | Duplicate Return |
R68 | Untimely Return |
R69 | Field Error --OR-- Multiple Errors |
R70 | Permissible Return Entry Not Accepted |
R71 | Permissible Return Entry Not Accepted |
R72 | Untimely Dishonored Return |
R73 | Timely Original Return |
R74 | Corrected Return |
R75 | Return Not a Duplicate |
R76 | No Errors Found |
R77 | Non Acceptance of R62 Dishonored Return |
R80 | IAT Entry Coding Error |
R81 | Non-Participant in IAT Program |
R82 | Invalid Foreign RDFI Identification |
R83 | Foreign RDFI Unable to Settle |
R84 | Entry Not Processed by Gateway |
R85 | Incorrectly Coded Outbound International Payment |
Canadian Return Codes
Canadian businesses, or businesses accepting bank payment from Canadian customers will need to re-send the bank authorization form to the customer to request authorization before trying to withdraw the funds again.
Return Code | Code Description | Additional Details |
|---|---|---|
900 | Edit Reject | Please reconfirm bank details with customer |
901 | NSF | The available and/or cash reserve balance is not sufficient to cover the payment request. |
902 | Account not found | The bank account appears to be valid but does not correspond to the individual identified in the payment request or the account number designated is not an open account. |
903 | Payment stopped/Recalled | The customer has placed a stop payment order on this payment. |
905 | Account closed | The bank account has been closed |
907 | No Debit allowed | This payment is not authorized |
908 | Funds not cleared | Although the ledger balance of the account indicates sufficient funds to cover the payment request, the available balance is not sufficient. |
909 | Currency/account mismatch | The payment request is not in the same currency as the bank account |
910 | Payor/Payee Deceased | The payor is deceased |
911 | Account Frozen | This bank account is frozen |
912 | Invalid/incorrect account number | Please reconfirm bank details with the customer |
914 | Incorrect Payor/Payee Name | Please reconfirm bank details with customer |
915 | No agreement existed - Business/Personal | The customer does not believe they have authorized this payment request through the Pre-Authorized Debit Agreement. Contact customer. |
916 | Not in accordance with agreement - Personal | The customer does not believe they have authorized this payment request through the Pre-Authorized Debit Agreement. Contact customer. |
917 | Agreement revoked - Personal | The customer who previously authorized payments from their account has now revoked this authorization. |
918 | No Confirmation/pre-notification - Personal | The customer does not believe they were given confirmation or pre-notification of this payment request. Contact customer. |
919 | Not in accordance with agreement - Business | The customer does not believe they have authorized this payment request through the Pre-Authorized Debit Agreement. Contact customer. |
920 | Agreement revoked - Business | The customer who previously authorized payments from their account has now revoked this authorization. |
921 | No Confirmation/pre-notification - Business | The customer does not believe they were given confirmation or pre-notification of this payment request. Contact customer. |
922 | Customer initiated Return Credit Only | This bank payment is not authorized |
990 | Institution in Default | Please reconfirm bank details with the customer |