By alphacardprocess July 8, 2025
ACH return codes specify the reason a bank-to-bank payment has not worked. Every code maps to a particular problem, for example, a lack of sufficient funds or an incorrect account number. Knowing these codes allows companies to quickly resolve payment failure, prevent expensive charges, and maintain a higher success rate for their transactions.
Most Common Causes of ACH Return
Code | Reason | Account Type | Return Time Frame |
R01 | Insufficient funds in the account | Consumer or Business | Within 2 banking days |
R02 | Account closed | Consumer or Business | Within 2 banking days |
R03 | No account found / Unable to locate account | Consumer or Business | Within 2 banking days |
R04 | Invalid account number format | Consumer or Business | Within 2 banking days |
R05 | Unauthorized debit using a corporate SEC code | Consumer only | Within 60 calendar days |
R06 | Return requested by originating bank (ODFI) | Consumer or Business | No fixed time limit |
R07 | Authorization revoked by customer | Consumer only | Within 60 calendar days |
R08 | Payment was stopped | Consumer or Business | Within 2 banking days |
R09 | Funds not yet collected | Consumer or Business | Within 2 banking days |
R10 | Originator not recognized or not authorized to debit account | Consumer or certain Business types | Within 60 calendar days |
Additional ACH Return Codes
Code | Reason | Account Type | Return Time Frame |
R11 | Not within authorization terms | Consumer / Certain Non-Consumer | 60 calendar days |
R12 | Account sold to another bank | Consumer or Business | 2 banking days |
R13 | Invalid routing number | Consumer or Business | Next file delivery time |
R14 | Representative payee deceased | Consumer or Business | 2 banking days |
R15 | Account holder deceased | Consumer | 2 banking days |
R16 | Account frozen / OFAC related | Consumer or Business | 2 banking days |
R17 | Invalid account or reversal error | Consumer or Business | 2 banking days |
R18 | Improper effective date | Consumer or Business | Next file delivery time |
R19 | Amount field error | Consumer or Business | Next file delivery time |
R20 | Non-transaction account | Consumer or Business | 2 banking days |
R21 | Invalid company ID | Business only | 2 banking days |
R22 | Invalid individual ID | Consumer or Business | 2 banking days |
R23 | Receiver refused credit | Consumer or Business | Upon receipt of refusal |
R24 | Duplicate entry | Consumer or Business | 2 banking days |
R25 | Addenda error | Consumer or Business | Next file delivery time |
R26 | Mandatory field missing | Consumer or Business | Next file delivery time |
R27 | Trace number error | Consumer or Business | Next file delivery time |
R28 | Routing number check digit error | Consumer or Business | Next file delivery time |
R29 | Not authorized by business customer | Business only | 2 banking days |
R30 | Not in check truncation program | Consumer or Business | Next file delivery time |
R31 | Permissible CCD/CTX return | Business only | Undefined |
R32 | RDFI unable to settle | Consumer or Business | Next file delivery time |
R33 | Return of XCK entry | Consumer or Business | 60 calendar days |
R34 | Limited participation DFI | Consumer or Business | Next file delivery time |
R35–R36 | Improper debit/credit | Consumer or Business | Next file delivery time |
R37–R39 | Source document issues | Consumer or Business | 2 to 60 calendar days |
R40–R47 | ENR-related or field errors | N/A | N/A |
R50–R53 | RCK item-related returns | Consumer | 60 calendar days |
R61–R62 | Misrouted or erroneous debit | Consumer | 2 to 5 business days |
R67–R76 | Return/dishonored return disputes | Consumer or Business | 2 to 5 banking days |
R80–R85 | IAT/foreign bank-related issues | Consumer or Business | 2 banking days (unless stated otherwise) |
Understanding ACH Return Fees
ACH return fees vary among financial institutions but tend to offset the expenses for handling failed transactions. Typical fees consist of customary return fees charged whenever any ACH payment is unsuccessful and NSF fees, which are usually in the range of $15–$35 when a payer’s account does not have sufficient funds. When a customer requests a stop payment, his or her bank might charge a stop payment fee in this range. Reinitiation fees are also imposed by some banks when companies attempt to re-present failed ACH debits. In addition, banks have the option of charging special fees like monthly ACH service charges or batch processing fees according to their policies.
How ACH Return Codes Work in Real-Life Situations
ACH return codes are governed under rules provided by NACHA, the regulator of the ACH network. Every code relates to a particular reason a payment was refused and is accompanied by its own deadline and obligations for action by financial institutions.
For example, if a customer is contesting an unauthorized debit on a subscription service, their bank (the RDFI) may return the transaction using return code R05 within 60 days of settlement. Alternatively, if the payment has failed because there are not sufficient funds, return code R01 would be used, and the bank would have to do something within two business days or face being held liable.
These codes change as electronic payments increase. One recent update includes code R11, which now identifies mistakes such as receiving the wrong amount or a payment for the wrong date. Every return code keeps things accountable while simplifying dispute resolution on ACH transactions.
How to Handle Large Volumes of ACH Returns
Handling a high volume of ACH returns effectively is about having a disciplined and active process. For starters, companies should focus on prevention by checking account details in advance with the help of micro-deposits or third-party verification services. Customer information—routing and account numbers—is best checked by automated systems and can minimize input errors considerably. Informing the customer of the implications of faulty entries, such as return fees, helps them double-check their information.
Behind the scenes, automating return processing with productivity tools assists with notifications and internal workflows effectively. Coupling payment systems with accounting or CRM platforms makes reconciliation even easier. Timely customer notice is also crucial—notify them of the return cause and provide alternatives such as alternative payments or flexible plans. In order to maintain gains, businesses need to track return rates, review return patterns, and collect feedback from employees and consumers. If returns continue at high levels, working with experienced ACH processors, collection agencies, or industry experts can provide further assistance and compliance guidance.
Best Practices for Managing ACH Returns
Reducing ACH returns begins with knowing what each return code signifies and making sure your staff is properly trained to manage them. In addition to keeping your policies current with the newest NACHA regulations, it is also important to keep up with the latest online banking security requirements.
Before authorizing ACH transactions, check bank account information utilizing micro-deposits or real-time account verification services to avoid problems early on. Communication is an important factor—inform customers in advance when a debit is planned and make them aware of how ACH operates to minimize confusion and unauthorized returns.
Always get appropriate written permission and keep it handy for quick resolution of disputes. Keep checking return patterns for frequent problems and resolve them at the source. Being aware of and planning for ACH return charges can also be beneficial if you’re processing a large number of payments—talking to your bank about getting better rates might be a good idea. Lastly, leveraging technology to automate transactions and reconcile payment systems with your accounting program can save considerable labor and cut down on errors.
How ACH Returns Impact Businesses
Returned ACH payments can create a ripple of business and financial inconvenience for companies. Every return translates into added administrative efforts and time spent on determining the reason, calling the customer, and clearing the payment. This not only holds up revenue but also impacts cash flow, particularly for small businesses that bank on timely payments.
Banks can impose return fees, and these fees can quickly accumulate. In addition to the financial impact, excessive returns can strain customer relationships and harm a company’s reputation. Excessive returns can indicate fraud or poor security measures, adding risk. If returns get too high, companies can be in danger of compliance issues or audits, which further complicate processes.
What's Returned When an ACH Payment Returns?
An ACH payment might be returned if the receiving bank (RDFI) is unable to complete the transaction due to reasons such as low funds, closed accounts, or improper information. Even after a successful-looking payment, it’s not necessarily done — the ACH network accommodates returns based on particular conditions.
When a payment is rejected, the ACH operator reverses it with special return codes indicating why the transaction could not be completed. In addition, in certain instances, companies can get a Notice of Change (NOC) if the customer’s bank account information has changed. This notifies the sender to make the adjustment. If the old information is not updated, future ACH requests will be rejected and cause additional returns.
Difference Between ACH Returns and ACH Reversals
ACH reversals and ACH returns can sound like the same thing, but they have different purposes and different procedures.
ACH Return
An ACH return occurs when a payment can’t be processed — most commonly due to problems such as insufficient funds, the account being closed, or incorrect account information. In such a scenario, the RDFI returns the payment to the ODFI. The returns are subject to strict NACHA guidelines and are typically presented within two banking days of settlement.
ACH Reversal
An ACH reversal, however, is initiated by the sender (originator) when they make a mistake — such as sending an incorrect amount or repeating an entry. The originator has to send a reversal entry for the complete original amount, and it has to be conducted within five banking days of the initial payment date, based on NACHA rules.
ACH Debit Return Time Frames Explained
The majority of ACH debit returns must be returned within two banking days of settlement. But returns for unauthorized consumer transactions allow up to 60 calendar days, providing consumers additional protection under federal banking regulations.
Can Returned ACH Payments Be Disputed?
Yes, returned ACH payments may be disputed in case they were misrouted, duplicated, had errors, were untimely, or resulted in unintended credits. The ODFI may dishonor the return within five banking days. If it is disputed by the RDFI, further resolution should take place outside the ACH network.
Risks of Excessive ACH Returns
High rates of ACH returns may result in expensive fees, interrupted cash flow, and strained vendor relationships. Excessive returns can indicate unsound payment practices, leading to bad debt and delayed payments. More critically, returns in violation of Nacha’s thresholds (e.g., 0.5% for unauthorized returns) can bring penalties of up to $500,000 and even suspension from the ACH network. Moreover, recurring errors or failed payments can erode customer trust and hurt your brand reputation, particularly if the payments are unauthorized or badly communicated. Handling ACH transactions properly is important in order to safeguard funds and ensure compliance.
ODFI vs. RDFI Defined
In ACH payment processing, two major participants are present: the ODFI and the RDFI.
The ODFI or Originating Depository
Financial Institution is the payment provider or bank that initiates the ACH transaction on behalf of the originator. This institution presents the request for payment to the ACH network and should be certified to do so. ODFIs are banks, payment processors, and gateways.
The RDFI, or Receiving Depository
Financial Institution, is the bank where the ACH entry is received and either credited or debited to the recipient’s account. It’s the bank that contains the account being impacted by the transaction.
ACH Returns vs. Chargebacks: The Main Differences
ACH returns and chargebacks tend to be misunderstood, but they work under very distinct systems. ACH returns occur when an electronic bank payment does not go through—for instance, if there are not enough funds or if account information is incorrect. These returns occur directly between banks, usually with minimal customer intervention. Funds are usually returned within two business days, and return reasons are easily specified by ACH return codes.
Chargebacks, in contrast, pertain to credit or debit card transactions. When a cardholder refuses a charge—usually due to fraud or dissatisfaction—the bank is able to reverse the charge and draw funds from the merchant’s account. It can do this without notice and even months afterward. Merchants are able to dispute chargebacks, but the process takes a long time and tends to favor the cardholder.
Dishonoring ACH Returns: When and How It Happens
If an ACH return is incorrectly submitted—i.e., it’s unauthorized, has the incorrect reason, or was received late—the receiving party can dispute it by issuing a dishonored return. It’s a method to reverse an invalid ACH return and rectify unwanted credits. A dishonored return may be issued under the following conditions:
- Untimely Return: The return was completed outside the permissible time frame.
- Incorrect Return: The return reason isn’t valid or correct.
- Misrouted Return: The return was directed to an incorrect account or institution.
- Duplicate Return: The return was previously submitted and incorrectly duplicated.
To dishonor a return, the request should be submitted within five banking days of the date of settlement of the original return. After such a deadline, the return will normally stand, whether it was made in error or not.
Conclusion
ACH return codes do not have to be difficult to understand. They are important to understand in order to handle failed payments effectively. Knowing what the reasons are and how to fix or avoid them can help businesses lessen errors, enhance cash flow, and improve relationships with customers.
FAQs
1. What is an ACH return code?
An ACH return code is a notification sent by a receiving bank describing the reason a transaction was rejected. It provides the exact cause of a returned payment.
2. How many banking days do I have to respond to an ACH return?
The majority of ACH returns need to be processed within two banking days, but some—such as unauthorized transactions—may be returned within 60 days.
3. What results in an ACH payment being returned?
Typical causes are low funds (R01), account closures (R02), invalid account numbers (R03), or non-authorized transactions (R05, R07, R10).
4. Is a returned ACH payment retryable?
Yes, after fixing the problem (e.g., new account information or available funds), the sender can resubmit the ACH payment.
5. How do businesses lower ACH returns?
Employ account verification instruments, keep accurate customer information, and ensure transparent payment terms in order to minimize return risks.