What Does Return Mobile ACH Payment Mean?
TABLE OF CONTENTS
Key Takeaways
- ACH Transaction Problems: Whenever an issue arises with a direct debit or credit card transaction processed through the Automated Clearing House (ACH) method, the involved parties send a code to identify the problem.
- Common ACH Return Codes: These are usually due to incorrectly entered information or insufficient funds. However, they can also reflect issues with authorization and more.
- Understanding ACH Returns: An ACH return occurs when the ACH fails to charge money from a customer’s account. The ACH return code reveals more about the problem’s source.
- ACH Payment Processing: Five parties are involved – Originator, Originating Depository Financial Institution (ODFI), ACH Operator, Receiving Depository Financial Institution (RDFI), and Receiver. If an issue occurs, usually the RDFI sends an ACH return message.
If you are using the Automated Clearing House (ACH) method to process customers’ transactions, you are likely to see three-digit codes if a problem arises.
Whenever there is an issue with a direct debit or credit card transaction, one of the parties involved in the payment processing will send a code. This code is your key to fixing or at least identifying what has blocked the transaction.
Some of the most common ACH return codes are caused by incorrectly entered information or insufficient funds available, while others can be more complicated and include issues with authorization and more.
Scroll down and search for the code you are looking for.
What Are ACH Returns?
An ACH return means that the ACH failed to charge money from a customer’s account. When it happens, there is always an ACH return code that gives more information about the source of the problem.
To understand why ACH returns appear, you need to know how they work in the first place. There are five parties involved in making the payment processing go through:
- Originator
This is a person who submits an ACH transfer to the ODFI. - Originating Depository Financial Institution (ODFI)
The ODFI receives the request from the Originator and passes it to the ACH Operator. - ACH Operator
The ACH Operator links the two accounts by processing transactions (e.g., clearing, delivery, settlement). - Receiving Depository Financial Institution (RDFI)
The RDFI is the bank that is being charged or refunded. It receives the ACH entry and submits it to the Receiver. - Receiver
The receiver is the individual or company that allows the Originator to initiate an ACH entry.
If there is a problem with the payment processing, it is usually the RDFI that sends an ACH return message. In rare cases, you may have the ACH Operator or ODFI do that. It is always one of the parties involved that sends the error code, which is, in turn, provided by the National Automated Clearing House.
Why Do ACH Returns Happen?
ACH return occurs when the payment cannot be processed for any particular reason. The payment is rejected, and the code pops up, indicating the exact cause of the problem.
To understand the code, you need to have its definition. There are over 80 ACH return codes; we will look at the most common ones. Go ahead and search for the one you need or bookmark this page in case you see an ACH return code for the first time.
What Are ACH Return Codes?
There are ten most common ACH return codes that you are likely to see.
| Reason for return | ACH return code | Description | Time Frame | |
| Insufficient funds | R01 | The bank account you requested money from does not have sufficient funds | 2 banking days | |
| Account closed | R02 | The account you requested money from has been closed | 2 banking days | |
| No Account/Unable to locate account | R03 | The account number does not match the customer’s name/ The account does not exist | 2 banking days | |
| Invalid account number | R04 | There is an error in the account number (e.g., incorrect digits) | 2 banking days | |
| Unauthorized debit to consumer account using Corporate SEC code | R05 | The account number of a customer is a personal bank account, not a corporate one (in cases of B2B payments) | 60 calendar days | |
| Returned due to ODFI’s request | R06 | Authorization failed (e.g., in cases of fraudulent payments) | Undefined | |
| Authorization revoked by customer | R07 | A customer who authorized the ACH payment has withdrawn it | 60 calendar days | |
| Payment stopped | R08 | A customer has issued a stop payment, which cancels a transaction | 2 banking days | |
| Unable to collect funds | R09 | A payment wasn’t completed because of lack of funds | 2 banking days | |
| Originator not known or not authorized to Debit Receiver’s Account | R10 | A transaction was incomplete or incorrectly submitted | 60 calendar days | |
How Long Does an ACH Return Take?
That depends on the specific reason why the return was initiated. However, in most cases, it will take 2 business days. The customer has the right to request that an unauthorized transaction be returned within 60 days – especially important for those businesses that are subscription-based or that take direct debit payments.
ACH Returns Best Practices
Want to better manage ACH returns and minimize their amount? Follow these best practices:
- Know what individual ACH return codes mean.
- Double-check the bank details to ensure they’re correct – for example, you can use micro-deposits to confirm.
- Keep your customers informed about upcoming transactions and get their authorization.
- Watch for patterns to catch any issue that might need addressing.
- Automate the process to minimize the risk of error.
Frequently Asked Questions
Can ACH payments be returned?
Yes, it is possible. There are many reasons that can cause the ACH payment to be returned. The most common ones are related to insufficient funds, incorrectly entered information or issues with an account.
Is It possible to dispute returned mobile ACH payment?
Yes, you can dispute returned ACH payment if:
- It was a duplicate
- It was misrouted
- It had incorrect information
- It did not occur within the designated timeframe
- It was caused by an accidental credit to the receiver that resulted from the reversal
How much is an ACH return fee?
ACH return fees may vary between $2 to $5 per return.
Are there ACH limits on how many ACH returns you can have?
Yes, your administrative returns need to stay within 3%.
Final Word
The ACH return codes occur due to a problem related to your current transaction. It is never a case that the system crashes and asks you to reissue the payment. Always pay attention to the three-digit code you receive and search for the needed information to know how to handle the return – and, of course, don’t forget to follow the best practices to minimize the number of returns you need to process.
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