ACH Returns
ACH payments can sometimes fail due to various issues related to the sender's or recipient's bank account. The table below outlines common ACH return codes, their associated failure messages, and recommended resolutions to help merchants efficiently handle these returns.
| NACHA CODE | FAILURE CODE | FAILURE MESSAGE | RESOLUTION |
|---|---|---|---|
| R01 | insufficient_funds | The account has insufficient funds to complete the transaction. | Advise the customer to fund their account or use another payment method. |
| R02 | account_closed | The account has been closed. | Request the customer to provide new bank account details. |
| R03 | no_account | The account cannot be located based on the provided account number. | Verify and re-enter accurate bank account information. |
| R04 | account_number_invalid | The account number is invalid. | Ask for the correct account details from the customer. |
| R07 | authorization_revoked | Account holder revoked the authorization of the outbound transfer. | Verify the transaction's legitimacy with the customer and ensure proper authorization. Because unauthorized transactions cannot be re-attempted within 60 days, advise the customer to provide a different payment method or wait to collect the payment after the 60-day period. |
| R08 | stop_payment | The account holder has placed a stop payment order on this payment. | Discuss with the customer to understand and resolve their concerns or seek an alternative payment arrangement. |
| R10 | not_recognized | Account holder has notified their bank that they do not recognize the entity attempting to debit their account. | Verify the transaction's legitimacy with the customer and ensure proper authorization. Because unauthorized transactions cannot be re-attempted within 60 days, advise the customer to provide a different payment method or wait to collect the payment after the 60-day period. |
| R16 | account_frozen | The account has been frozen. | Advise the customer to contact their bank to resolve the freeze and possibly provide another account. |
| R20 | not_permitted | Transactions are prohibited or limited against this account. | Inform the customer to consult their bank to lift the restriction or use another account. |
| R26 | invalid_field | Mandatory fields have either incorrect or missing data. | Request that the customer review and correct the fields in question. |
| R29 | not_authorized | Account holder has notified their bank that the payment was not authorized. | Verify the transaction's legitimacy with the customer and ensure proper authorization. Because unauthorized transactions cannot be re-attempted within 60 days, advise the customer to provide a different payment method or wait to collect the payment after the 60-day period. |
Prevent ACH Returns
- Verify account information: Ensure that all account details, including routing and account numbers, are accurate and current before initiating payments.
- Use verification tools: Implement tools, such as Plaid, to confirm the validity of account details. This helps avoid payments to closed or invalid accounts.
- Monitor funding: Regularly check account balances to confirm sufficient funds are available prior to initiating ACH payments.
- Strengthen authorization protocols: Secure explicit customer approvals for recurring payments and periodically update these authorizations as needed.