ACH Return Codes – a Savvy Guide

ACH Return Codes, ACH Declines, ACH Returns

    TABLE OF CONTENTS

      Key Takeaways


      • ACH Payments and Returns: ACH payments are convenient and cost-effective. However, businesses must understand ACH return codes to avoid revenue loss and increased fees.
      • Common ACH Return Codes: Examples include insufficient funds (R01), payment stopped (R08), account frozen (R16), and non-transaction account (R20). Understanding returned mobile ACH payment codes can help businesses troubleshoot and resolve issues efficiently.
      • Administrative ACH Declines: Codes like account closed (R02), unable to locate account (R03), and invalid account number (R04) fall under this category. Using dual account entry can minimize such administrative returns by verifying banking information accurately.
      • Unauthorized Debit Entry ACH Return Codes: Codes like unauthorized debit to consumer’s account (R05) and authorization revoked (R07) indicate blocked payment attempts. These often come with higher merchant fees, so it’s important to establish business protocols to avoid them.

      Accepting ACH Payments is a win-win situation. It is certainly more convenient than paper checks and the hassle that can create when you need to collect on bounced payments. On behalf of your clients, it facilitates convenient payments. For merchants like yourself, your business can generate more revenue affordably.

      When adding ACH to your payment options, it is essential to familiarize yourself with ACH return codes. An ACH transaction can be returned due to many factors. Irrespective of the cause, these returns can lead to revenue loss and an increase in fees owed to your payment processor.

      Although some returns can’t be avoided, most of them can be easily prevented or reduced. To help you understand the language of ACH, Payment Savvy offers this go-to guide on the most readily seen ACH return codes.

      How Do ACH Return Codes Work

      When a financial institution cannot collect funds from a customer’s account for whatever reason, the transaction will be reversed, and a code specifying why the problem occurred will be provided. There are several reasons why a payment might not go through, from something as simple as insufficient funds or incorrect bank information to more complex issues such as RDFI being unable to process a transaction without a physical check.

      Each ACH return code starts with an R and is followed by two numbers. At the moment, ACH return codes go up to R85, although it’s important to remember that the codes are constantly evolving, with some of them being pulled out of use or changed and new ones being introduced.

      In those cases, it’s important to have a business partner who will help you stay on top of things so that no ACH return code comes as a surprise – such as My Payment Savvy. At MPS, it is our duty to stay on top of all financial news, and that includes any changes to ACH codes. When working with us, you won’t have to worry about not knowing what happened to a transaction and how to revert it – we’ve got you covered in this regard.

      Most Common ACH Return Codes

      ACH Return Code Reason for Return Description
      R01 Insufficient Funds Customer does not have enough available funds to cover an ACH payment transaction.
      R02 Account Closed Bank account debited is closed due to the actions of your customer or the Receiving Depository Financial Institution (RDFI).
      R03 Unable to Locate Account ACH payment information provided doesn’t match your client’s name, or the account number does not exist.
      R04 Invalid Account Number Checking account number submitted for processing is not correct.
      R05 Unauthorized Debit to Consumer’s Account A debit was attempted on a consumer’s account, but the consumer indicates the payment was not authorized.
      R06 ODFI Requested Return ODFI returned the transaction as a result of an issue identified on their end.
      R07 Authorization Revoked Customer revoked your business’ authorization to debit the bank account for future payments.
      R08 Payment Stopped ACH receiver requested a stop payment order on an ACH entry.
      R09 Uncollected Funds Sufficient funds are available in the account, but the account holder’s deposit has not cleared.
      R10 Customer Advises Unauthorized Transaction Customer advises their financial institution to not pay an ACH transaction due to it not being recognized or authorized.
      R16 Account Frozen Due to legal issues or an action by the RDFI, a bank account is frozen and not available to debit.
      R20 Non-Transaction Account ACH transaction attempted cannot be processed on a customer’s bank account.

      Other ACH Return Reason Codes

      Reason for return ACH return code Description
      Check truncation entry return R11 The debit entry stated the incorrect amount/The debit entry was debited before it was authorized
      Branch sold to another DFI R12 The bank was sold to another Depository Financial Institution (DFI). The purchasing bank will continue to process entries submitted by accounts from the old branch
      Invalid ACH routing number R13 An ACH transfer cannot be completed due to an incorrect routing number
      Representative payee deceased or unable to continue in that capacity R14 The person to whom you have submitted an entry died
      Beneficiary or account holder deceased R15 A bank account holder or a beneficiary did and cannot continue accepting payments
      Account frozen/entry returned per OFAC instruction R16 The money cannot be collected because the account has been frozen due to a legal action against it
      File record edit criteria R17 There is no valid account number or it was created under unclear circumstances
      Improper effective entry date R18 The entry date that was added is invalid
      Amount field error R19 The amount was entered incorrectly (e.g., non-numeric characters)
      Non-transaction account R20 The account has been prohibited or limited
      Invalid company identification R21 The company ID has not been accepted (e.g., it is invalid because of a typo)
      Invalid individual ID number R22 A payment has been submitted incorrectly (e.g., a customer could enter incorrect information)
      Credit entry refused by the receiver R23 The entry was refused because (1) the Receiver doesn’t recognize the Originator; (2) the amount wasn’t received; (3) the minimum amount required failed to be paid
      Duplicate entry R24 The transaction matches another transaction submitted previously
      Addenda error R25 There is a problem with the addenda record (e.g., types incorrectly, out of sequence, etc.)
      Mandatory field error R26 The information hasn’t been entered into an obligatory field. The submission cannot proceed without this crucial piece of data
      Trace number error R27 Trace number of an addenda doesn’t match the trace number of the entry detail record/the trace number is not present in the addenda record
      Routing number check digit error R28 An ACH return has occurred because the routing number is entered incorrectly
      Corporate customer advises not authorized R29 The Receiver has informed the RDFI that the originator is not authorized to process payments on their account
      RDFI not a participant in check truncation program R30 The RDFI cannot process a payment without a physical check
      Permissible Return Entry R31 The RDFI requests to return a CCD or CTX Entry
      RDFI non-settlement R32 The RDFI failed to reach a settlement and couldn’t approve the transaction
      Return of XCK entry R33 The RDFI decides to return an XCK Entry
      Limited participation RDFI R34 The RDFI is denied or limited in participation
      Return of improper debit history R35 The Return Entry was caused by an improperly submitted debit entry
      Return of improper credit history R36 The Return Entry was caused by an improperly submitted credit entry
      Source document presented for payment R37 The source document that was presented for payment relates to an ARC (Accounts Receivable Conversion), BOC (Back Office Conversion), and POP (Point-of-Purchase).
      Invalid transaction code R41 The transaction cannot be completed because of an invalid or incorrect transaction number.
      Routing number/check digit error R42 The transaction cannot be completed as there’s an error in the provided routing number or check digit (applicable to settlement accounts).
      Stop Payment on Item Related to RCK Entry R52 The transaction contains a Represented Check Entry (RCK)| that has a stop payment order on it.
      Duplicate Return R67 The transaction has already been processed returned.
      Untimely Return R68 Return was not sent within an established timeframe.
      Field Error R69 One of the fields in the return has been filled incorrectly by the ODFI.
      No Errors Found R76 RDFI contests an originally dishonored return.
      IAT entry coding errors R80 The IAT Entry is being returned because of (1) an invalid Foreign Exchange; (2) an invalid ISO Destination Currency Code; (3) an invalid ISO Originating Currency Code; (4) invalid Transaction Type Code
      Non-participant in IAT program R81 The Originating Gateway is not in agreement with ODFI to process international entries
      Invalid foreign receiving DFI identification R82 The reference that identifies Foreign Receiving DFI of an Outbound IAT Entry is invalid
      Foreign receiving DFI unable to settle R83 There are settlement problems in the foreign payment system
      Entry not processed by gateway R84 The IAT Entry cannot be processed by the gateway because it does not support transaction processing functions
      Incorrectly coded outbound international payment R85 There is no information that is required to process a transaction

      A Closer Look at the Most Common ACH Return Codes

      keyboard with ACH written on a key

      Let’s take a closer look at the most common ACH return codes:

      • R01 – This ACH return is probably the most common reason for an ACH return. It appears when the available balance is lower than the required amount. A merchant will most likely address it by contacting the customer for another payment method or try and collect the funds again.
      • R02 – This ACH return code appears when the account that is being debited has been closed, either by a financial institution or the owner of the account. A merchant should address this by contacting the customer and asking for an alternative payment method.
      • R03 – This ACH return code appears when the financial institution is unable to collect funds from an account because it’s unable to locate it. A merchant should address this by contacting the customer to confirm the banking details.
      • R04 – This ACH return code appears when the format of the account number does not match the format required by the financial institution. A merchant should contact the customer to confirm the account number is correct.
      • R07 – This ACH return code appears when the customer revokes the transaction authorization. A merchant should address this by receiving new authorization from the customer.
      • R08 – This ACH return code appears when the account holder requests a stop on the transaction. A merchant should address it by contacting the customer for new authorization.

      Handling ACH Returns with My Payment Savvy

      ACH returns can be costly; fortunately, establishing a plan for handling and avoiding ACH return codes is easier than most merchants anticipate. The simplest way to prevent returns is KYC – Know Your Customer. Ensure you have current and correct contact information for your clients.

      Also, make sure it’s easy for customers to reach you. If it is simple to chat, they will most likely discuss your business’s issue first over revoking authorization with their bank. Similarly, reaching out to a customer when a simple return is received, such as an invalid routing number, can quickly correct an unintended error.

      Having payment authorization on file for every ACH payment processed is a must-have. Whether in electronic or hard copy format, this simple document is paramount to provide in case required to prove your business has permission to debit a bank account. Also, get in the habit of verifying bank account information to avoid the transposing of digits or simple human errors. Make sure the customer is aware of the ACH process date and debit total. In the case of recurring payments, we recommend providing all future payment date attempts and dollar amounts.

      We hope this guide provides insight into the ACH return reason process. Want to discuss your payment strategies or expand your current payment solutions? Reach out to Payment Savvy today. Since 2010, we have provided innovative options to our clients.

      Eli Smith

      Eli Smith

      Responsible for keeping Payment Savvy running like a well-oiled machine, Eli has extensive experience with everything related to technology and financial services. Maintaining back-end operations efficient and productive isn't his only strong suit, Eli is also a key component of our sales team and is in constant pursuit of perfection. In charge of ground-breaking partnerships, he is always on the lookout for the next innovative product offering for our Savvy clientele. Eli's knowledge of the payment processing cycle and critical compliance standards ensure our customer base always has an educated and expert opinion if needed.