Troubleshooting ACH payment returns

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Received an 'ACH payment returned' notification? Don't worry, it happens.

This guide will help you understand why bank payments are sometimes returned, how Helcim informs you, and provide actionable steps for handling returns for both your US and Canadian customers.


In this article


Why ACH payments get returned


ACH payments are generally reliable, but returns can happen for various reasons, much like a paper check might bounce. Common reasons include:

  • Insufficient Funds (NSF): The customer's account didn't have enough money to cover the payment.

  • Account Closed / Invalid Account Number: The bank account provided is no longer active or the details are incorrect.

  • Authorization Revoked by Customer: The customer told their bank they no longer authorize payments to your business from that account.

  • Stop Payment Order: The customer instructed their bank to stop this specific payment.

  • Customer Advises Not Authorized / Dispute: The customer informed their bank they did not authorize the transaction. This is a common reason for "failed authorizations" inquiries.

How Helcim notifies you about returns (and the $5 fee)


You’ll find out about an ACH return through the following:

  • Email notification: If an ACH payment is returned, Helcim will automatically send you an email. This email will include a return code and a brief explanation of why the payment failed.

  • Funds withdrawal (if settled): If the returned payment had already been processed and the funds were credited to your account (i.e. status was "Settled"), Helcim will automatically withdraw the principal amount of the transaction from your linked bank account. This will also be noted in the return email.

  • $5 return fee: As per our terms of service, any ACH payment that is returned or rejected by the bank network will incur a $5 fee. This fee is charged by the banking network and passed through.

Tips for minimizing ACH payment returns


While you can't prevent all returns, these practices can help reduce them:

  • Verify account details upfront: Encourage customers to double-check their bank account and routing numbers when providing them. Using Helcim's secure bank verification request can help catch errors.

  • Clear authorization: Ensure you have clear, documented authorization from your customers for all ACH debits, especially for recurring payments. Helcim's tools are designed to help you obtain and store these authorizations (like PAD Agreements for Canadian customers).

  • Communicate clearly: For recurring payments, inform customers about upcoming debit dates and amounts. Make it easy for them to update their bank information with you if it changes.

  • Build good customer relationships: Trust and open communication can often prevent misunderstandings that might lead to disputes or stop payments.

  • Monitor transactions: Keep an eye on your incoming ACH payments.

  • Prudent refund policy: For refunds on sales made via ACH, consider waiting 3-5 business days after the initial ACH payment has fully settled into your account before issuing the refund. This minimizes your risk if the original payment is unexpectedly returned after you've already sent funds back.

What to do when you receive a return


  1. Review the email from us: Carefully read the return notification email. Note the return code and the reason provided.

  2. Check the return code details: Refer to the common US or Canadian return codes listed below for specific next steps based on the code.

  3. Contact your customer (usually): In most cases, you'll need to contact your customer to resolve the issue (e.g., to obtain new bank details, discuss NSF, or clarify an authorization).

  4. Update your customer’s information: If you receive new bank account information, update it in the customer's profile in your Helcim account and obtain new authorization if required (especially for Canadian PADs).

  5. Avoid re-running payments for certain codes: For returns due to revoked authorization, stop payments, or disputes, do not simply try to process the payment again without resolving the underlying issue and obtaining new authorization.

Common US ACH return codes


Here are some common US return codes and recommended actions.

R01 - Insufficient Funds

Next Step: Contact your customer. Inform them of the NSF return and discuss making the funds available. You may retry the ACH payment once you have confirmation from the customer that funds are present.

R02 - Account Closed

Next Step: Contact your customer to request new bank account information or an alternative payment method. Do not retry on the closed account.

R03 - No Account / Unable to Locate

Next Step: Contact your customer to verify their bank account details (account number, routing number). There might be a typo. Obtain corrected information before retrying.

R04 - Invalid Account Number

Next Step: Contact your customer to verify the account number structure. Obtain corrected information before retrying.

R05 - Unauthorized Debit to Consumer Account

Next Step: This indicates an issue with the authorization type or format. Review the authorization you have. You may need to obtain a new, compliant authorization before attempting any further debits. Do not simply retry the ACH.

R07 - Authorization Revoked by Customer

Next Step: Do not attempt further debits. The customer has revoked authorization with their bank. Contact the customer to discuss why and arrange an alternative payment method if a balance is due.

R08 - Payment Stopped

Next Step: Do not attempt further debits for this specific payment. Contact your customer to understand why they stopped the payment and resolve any underlying issues.

R09 - Uncollected Funds

Next Step: Similar to R01. Contact your customer. While funds might be in the account, they aren't "available" (e.g., a recent deposit hasn't cleared). Confirm availability before retrying.

R10 - Customer Advises Not Authorized (Improper / Ineligible / Dispute)

Next Step: Do not attempt further debits. This is a formal dispute. Contact the customer to understand the issue. You may need to provide proof of authorization. This is a key code related to "failed authorization" feedback.

R29 - Corporate Customer Advises Not Authorized

Next Step: For B2B transactions. Similar to R10, do not re-debit. Contact your corporate customer to resolve the authorization issue.

Common Canadian ACH (EFT/PAD) return codes


For returns on payments from Canadian bank accounts, re-obtaining authorization via a new PAD Agreement is often required before re-attempting.

901 - NSF (Non-Sufficient Funds)

Next Step: Contact your customer. Inform them of the NSF return and discuss making funds available. Before retrying the payment, ensure you still have a valid PAD Agreement. If it's been some time, it's best practice to have them complete a new one.

902 - Account Not Found / No Account

Next Step: Contact your customer to verify their bank details (institution, transit, account number). Obtain corrected information and have them complete a new PAD Agreement.

903 - Payment Stopped / Recalled

Next Step: Do not retry the payment. Contact your customer to understand why the payment was stopped and resolve any issues.

905 - Account Closed

Next Step: Contact your customer for new bank details or an alternative payment method. Have them complete a new PAD Agreement for the new account.

907 - No Debit Allowed

Next Step: Contact the customer. This account may not permit debits or the specific type of debit you attempted. You may need new account information and a new PAD Agreement.

915 - No Agreement Existed (Business/Personal)

Next Step: The customer states no PAD Agreement was in place. Do not re-debit. You must have the customer complete a valid PAD Agreement. This is a key code for "failed authorization" feedback.

917 - Agreement Revoked (Personal)

Next Step: Do not retry the payment. The customer has revoked the PAD Agreement. Contact them to discuss alternative solutions (if possible).

920 - Agreement Revoked (Business)

Next Step: Do not retry. The business customer has revoked the PAD Agreement. Contact them to discuss alternative solutions (if possible).

Next steps


  • Familiarize yourself and your team with these common return codes and the appropriate actions.

  • Implement the "Tips for minimizing ACH payment risks" in your daily operations.

  • Ensure you have a clear process for contacting customers when returns occur.

  • If you have questions about a specific return not covered here, the Helcim Support team is ready to help!


FAQs

Can I retry a returned ACH payment immediately?

It depends heavily on the reason for the return, as indicated by the return code. For an NSF (R01/901), you might retry after confirming with the customer. For codes like "Authorization Revoked" (R07/917/920) or "Not Authorized" (R10/915), absolutely not – you must resolve the authorization issue first.

How many times can I retry an NSF payment?

Banking network rules (NACHA in the US, Payments Canada) have limits on retries (typically no more than two retries for NSF).

However, it's always best practice to communicate with your customer after the first NSF before attempting again to ensure a better success rate and customer experience.

Will I always be charged the $5 fee for every return?

Yes, the $5 fee applies to each ACH payment that is returned by the banking network, regardless of the reason.

What if a customer disputes an ACH payment I believe was authorized?

If a customer disputes a charge (e.g. return code R10 or 915), you'll need to provide proof of their authorization (like the signed PAD Agreement or ACH mandate). Keep these records accessible. If needed, reach out to our support team for guidance on what documentation is typically required.

Are there fees for refunding an ACH payment?

When you refund an ACH payment, the original transaction fees are not returned. There isn't an additional Helcim fee to process the refund action itself. For complete details, see our article on refunds for ACH payments.