ACH Return Codes
ACH returns can occur for various reasons, including insufficient funds in the customer’s account, closed accounts, invalid account numbers, or incorrect customer information. When an ACH payment is returned, funds did not transfer and an ACH Reject-Return Code identifies the reason for the failed payment.
What is an ACH return code?
The ACH return code helps the business understand why the payment was returned and take appropriate action to resolve the issue. It is important for businesses to familiarize themselves with the different ACH return codes and understand their meanings to efficiently handle returned payments.
What are some common ACH return codes?
These are just a few examples of ACH return codes. There are many more codes, each with its own specific meaning, please see the glossary below. Understanding the ACH return codes helps businesses identify the issue and take appropriate action to resolve it.
ACH Reject-Return Codes Glossary
ACH Return Code Notes
The ACH Return Code R31 is a less common return code the RDFI uses when returning a CCD or CTX entry. CCD stands for Cash Concentration or Disbursement, a payment format for corporate credits and debits. The CCD format ensures quick and secure transfers, which can secure funds overnight. CTX, on the other hand, requires additional records or further information on the transactions.
To ensure that an ACH payment is returned as an acceptable return entry CCD or CTX, specific requirements must be met. First, the payment must be sent using the CCD or CTX format. Second, the payment must include the correct account number, company ID, and trace number. Third, the payment must be sent to the correct receiver. Fourth and finally, the payment must be sent with the correct amount. If all these requirements are met, the payment will not be returned as an acceptable return entry CCD or CTX. Instead, it will be returned as an unauthorized payment or sent to an incorrect receiver.
With an ACH Return Code R31, the ODFI must give the RDFI permission to return if the request comes after the return deadline of two banking days. ACH return code R31 is a non-consumer-related return code whose correctional timeline is undefined.
If a merchant receives an ACH return code R31, the merchant will need customer authorization to debit or credit another bank account.. Alternatively, you may request an entirely different form of payment from your customer.
Non-compliance with ACH Return Code R31 can result in several significant consequences, including an increase in processing costs, which may cause delays in payment processing, which can negatively impact customer satisfaction and potentially result in the loss of business opportunities.
Additionally, the merchant could be exposed to potential fines and penalties.
In addition to ACH Return Code R31, you should be aware of several other ACH return codes.
ACH Return Codes R01 and R02
R01 indicates insufficient funds in the account. R02 signifies that the account is frozen and unable to process the transaction. And R03 which indicates that the account does not exist or cannot be located.
Return Codes R10, R20 and R22
R10 signifies that the customer has been advised that the transaction was unauthorized. R20, which indicates an invalid company identification number. And, R22 is used when there is an invalid individual identification number.