Overview
ACH (Automated Clearing House) payments can occasionally fail or be returned after submission. It's important for merchants to understand how ACH returns work, how to track them, and what common return codes mean. This helps prevent disruptions, manage customer relationships, and maintain compliance with ACH rules.
What Are ACH Returns and Late Returns?
ACH returns occur when a submitted transaction is rejected either before or after funds reach your account:
- Return: The transaction fails before funds are deposited.
- Late Return: The transaction is reversed after funds have already been deposited, and the amount is withdrawn from your account.
Returns may be triggered for reasons like insufficient funds, incorrect account details, or authorization issues.
How to Track ACH Returns
To monitor ACH returns in your merchant portal:
- Log in to your Merchant Portal.
- Navigate to Transaction Reports → Search Transactions.
- Locate the transaction and click its Transaction ID to open Transaction Details.
- Review the Gateway Response Code and Gateway Response Text at the bottom of the page.
Additionally, you can:
- Enable E-Check Notifications in your user settings to receive return alerts by email.
- Filter for Returns/Chargebacks in transaction reports.
Common ACH Return Codes and What They Mean
Here are common return codes you may encounter:
Insufficient Funds & Account Issues
- R01 – Insufficient Funds: Not enough money in the customer’s account.
- R02 – Account Closed: The account is no longer active.
- R03 – No Account/Unable to Locate Account: Account number doesn’t match any on record.
- R04 – Invalid Account Number: Incorrectly formatted or invalid account number.
Authorization & Transaction Errors
- R05 – Unauthorized Debit to Consumer Account: No authorization on file.
- R07 – Authorization Revoked by Customer: Customer canceled prior authorization.
- R10 – Customer Advises Not Authorized: Customer disputes the transaction.
- R29 – Corporate Customer Advises Not Authorized: A business account reports it did not authorize the debit.
Bank & Processing Issues
- R08 – Stop Payment: Customer requested to stop the payment.
- R09 – Uncollected Funds: Funds exist but are not yet available.
- R16 – Account Frozen: Account is frozen for legal or other reasons.
Invalid Data & Formatting Errors
- R11 – Check Truncation Entry Return: Check processing error.
- R12 – Branch Sold to Another Bank: Account is invalid due to branch sale.
- R13 – Invalid Routing Number: Incorrect routing number.
- R20 – Non-Transaction Account: Attempted on an account that cannot process ACH.
Note: Repeated ACH returns can lead to fines or suspension of your ACH processing privileges.
Merchant Impacts
Understanding ACH returns helps merchants:
- Prevent avoidable errors by verifying customer information upfront
- Identify and resolve failed payments faster
- Reduce customer dissatisfaction or service delays
- Maintain compliance with ACH network regulations
Common Questions
What happens when an ACH payment is returned?
If a return occurs, the funds are either never deposited or withdrawn from your account if already settled.
How do I know why a transaction was returned?
Use the Transaction Report to view the return reason code and message for any returned transaction.
Can I resubmit a returned transaction?
Yes, but only after confirming the issue (such as getting updated account info or verifying authorization).
Can ACH returns be prevented?
While not all returns are avoidable, collecting accurate customer details and obtaining proper authorization greatly reduces the risk.
Need Help?
If you need help understanding a return code or resolving a failed ACH payment, contact your Merchant Service Provider.