A Guide to ACH Return Codes and Time Frames

Categories: ACH Payments

ACH Return Codes and Time Frame: Top 3 Essential Tips 2024

Streamlining ACH Return Codes and Time Frames

ACH return codes and time frames are essential for any financial institution dealing with Automated Clearing House (ACH) payments. Return codes help you understand why a transaction couldn’t go through, while time frames inform you when a response is due.

Here’s a quick list of key points to address your search intent:
– ACH return codes explain why a transaction failed.
– Common return codes include R01 (Insufficient Funds) and R02 (Account Closed).
– Standard time frames for addressing return codes are typically within 2 banking days.

ACH payments are electronic bank-to-bank transfers used in the United States. They offer a convenient and cost-effective way for businesses to handle transactions. However, understanding ACH return codes and the associated time frames is crucial for maintaining smooth operations and compliance with NACHA rules.

Financial institutions use ACH return codes to explain why a payment failed. Common reasons can range from insufficient funds to the account being closed. Knowing these codes and their time frames can help you quickly address issues, avoid delays, and maintain good customer relations.

For a visual representation, please refer to the infographic below.

ACH Return Codes and Time Frames Infographic - ach return codes and time frame infographic step-infographic-4-steps

What are ACH Return Codes?

ACH return codes are specific numbers assigned by NACHA to indicate why an ACH payment has failed. These codes are essential for understanding the issues behind payment failures and knowing how to address them.

Common ACH Return Codes

Here are the ten most common ACH return codes:

  • R01 – Insufficient Funds: The customer’s account doesn’t have enough money to cover the transaction.
  • R02 – Account Closed: The account has been closed by the customer or the bank.
  • R03 – Unable to Locate Account: The account number provided does not match any account at the bank.
  • R04 – Invalid Account Number: The account number is incorrect or improperly formatted.
  • R05 – Unauthorized Debit to Consumer Account: The debit was not authorized by the account holder.
  • R06 – Returned per ODFI’s Request: The ODFI requested the return of the payment.
  • R07 – Authorization Revoked by Customer: The customer has revoked the authorization for the payment.
  • R08 – Payment Stopped: The customer has placed a stop payment on the transaction.
  • R09 – Uncollected Funds: The account has uncollected funds that are not available for withdrawal.
  • R10 – Customer Advises Unauthorized Transaction: The customer has reported the transaction as unauthorized or improper.

Less Common ACH Return Codes

These codes are less frequent but still important to know:

  • R11 – Check Truncation Entry Return: Used when returning a check truncation entry.
  • R12 – Branch Sold to Another DFI: The account has been transferred to another financial institution.
  • R13 – Invalid ACH Routing Number: The routing number provided is incorrect.
  • R14 – Representative Payee Deceased: The representative payee has passed away or cannot continue.
  • R15 – Beneficiary Deceased: The account holder or beneficiary is deceased.
  • R16 – Account Frozen: The account has been frozen due to legal action or OFAC instruction.
  • R17 – File Record Edit Criteria: There are errors in the file record.
  • R18 – Improper Effective Entry Date: The entry date is more than two banking days after the processing day.
  • R19 – Amount Field Error: The amount is either non-numeric, zero, or exceeds $25,000.
  • R20 – Non-Transaction Account: The account is not set up for transactions.
  • R21 – Invalid Company Identification: The company ID provided is not valid.
  • R22 – Invalid Individual ID Number: The individual ID number is incorrect.
  • R23 – Credit Entry Refused by Receiver: The receiver has refused the credit entry.
  • R24 – Duplicate Entry: The transaction is a duplicate.
  • R25 – Addenda Error: There is an error in the addenda record.
  • R26 – Mandatory Field Error: A required field is missing or incorrect.
  • R27 – Trace Number Error: The trace number is missing or incorrect.
  • R28 – Routing Number Check Digit Error: The check digit for the routing number is invalid.
  • R29 – Corporate Customer Advises Not Authorized: The corporate customer has not authorized the transaction.
  • R30 – RDFI Not Participant in Check Truncation Program: The RDFI does not participate in the check truncation program.
  • R31 – Permissible Return Entry: The entry is permissible but returned.
  • R32 – RDFI Non-Settlement: The RDFI cannot settle the entry.
  • R33 – Return of XCK Entry: Used for returning XCK entries.
  • R34 – Limited Participation DFI: The DFI’s participation is limited by their supervisor.
  • R35 – Return of Improper Debit Entry: The debit entry is not permitted.
  • R36 – Return of Improper Credit Entry: The credit entry is not permitted.
  • R37 – Source Document Presented for Payment: The source document was presented for payment.

Rare ACH Return Codes

These codes are rarely encountered but still worth noting:

  • R38 – Stop Payment on Source Document: A stop payment was placed on the source document.
  • R39 – Improper Source Document: The source document is improper.
  • R40 – Return of ENR Entry: The return of an ENR entry by a Federal Government Agency.
  • R41 – Invalid Transaction Code: The transaction code is invalid.
  • R42 – Routing Number/Check Digit Error: The routing number or check digit is incorrect.
  • R43 – Invalid DFI Account Number: The DFI account number is invalid.
  • R44 – Invalid Individual ID Number: The individual ID number is invalid.
  • R45 – Invalid Individual Name/Company Name: The name provided is invalid.
  • R46 – Invalid Representative Payee Indicator: The representative payee indicator is invalid.
  • R47 – Duplicate Enrollment: The enrollment is a duplicate.
  • R50 – State Law Affecting RCK Acceptance: State law affects the acceptance of the RCK entry.
  • R51 – Item Related to RCK Entry is Ineligible: The item is ineligible for RCK entry.
  • R52 – Stop Payment on Item Related to RCK Entry: A stop payment was placed on the item.
  • R53 – Item and RCK Entry Presented for Payment: Both the item and the RCK entry were presented for payment.
  • R61 – Misrouted Return: The return was misrouted.
  • R62 – Return of Erroneous or Reversing Debt: The return is due to an erroneous or reversing debt.
  • R67 – Duplicate Return: The return is a duplicate.
  • R68 – Untimely Return: The return was not made in a timely manner.
  • R69 – Field Error(s): There are errors in the field.
  • R70 – Permissible Return Entry Not Accepted: The return entry was not accepted.
  • R71 – Misrouted Dishonored Return: The dishonored return was misrouted.
  • R72 – Untimely Dishonored Return: The dishonored return was not made in a timely manner.
  • R73 – Timely Original Return: The original return was timely.
  • R74 – Corrected Return: The return has been corrected.
  • R75 – Return Not a Duplicate: The return is not a duplicate.
  • R76 – No Errors Found: No errors were found.
  • R77 – Non-Acceptance of Dishonored Return: The dishonored return was not accepted.

For international ACH transactions, the following codes are used:

  • R80 – IAT Entry Coding Errors: There are coding errors in the IAT entry.
  • R81 – Non-Participant in IAT Program: The entity is not a participant in the IAT program.
  • R82 – Invalid Foreign Receiving DFI Identification: The foreign DFI identification is invalid.
  • R83 – Foreign Receiving DFI Unable to Settle: The foreign DFI cannot settle the entry.
  • R84 – Entry Not Processed by Gateway: The entry was not processed by the gateway.
  • R85 – Incorrectly Coded Outbound International Payment: The international payment was incorrectly coded.

Understanding these ACH return codes and their implications can help you quickly resolve payment issues and maintain smooth financial operations.

ACH return codes - ach return codes and time frame

ACH Return Codes and Time Frames

When dealing with ACH payments, understanding ACH return codes and time frames is crucial. Each return code has a specific reason and a defined time frame for resolution. Let’s break down these time frames:

Standard Time Frames

For most ACH return codes, the standard time frame is 2 banking days. This means the Receiving Depository Financial Institution (RDFI) must return the entry to the Originating Depository Financial Institution (ODFI) within this period. Here are some common codes with this time frame:

  • **R01

Extended Time Frames

Some ACH return codes have an extended time frame of 60 calendar days. These typically involve unauthorized transactions, giving consumers more time to dispute. Examples include:

  • **R05

Special Cases

Certain ACH return codes have undefined time frames, meaning the time frame is determined by the ODFI and RDFI. These special cases include:

  • **R06

Understanding these time frames helps ensure compliance with NACHA rules and smooth financial operations. For more details on ACH return codes, visit Nacha Tech.

Handling ACH Returns

When an ACH payment fails, it triggers a return process. This involves both the RDFI (Receiving Depository Financial Institution) and the ODFI (Originating Depository Financial Institution). Here’s how to handle these returns effectively.

Steps to Resolve ACH Returns

  1. Contact the Customer

The first step is to reach out to the customer. Understanding why the transaction failed can help you resolve the issue quickly. For instance, if the return code is R07 (Authorization Revoked by Customer), you’ll need to confirm why the customer revoked the authorization.

  1. Retry the Transaction

In some cases, you can retry the transaction. For example, if the return code is R09 (Uncollected Funds), you can attempt the transaction up to two times within 30 days of the original payment authorization date.

  1. Update Account Information

If the return code indicates outdated or incorrect account information, such as R03 (No Account/Unable to Locate Account), you should update the account information before resubmitting the transaction. This can prevent future returns.

Disputing ACH Returns

Sometimes, you might need to dispute a returned ACH payment. Here are some scenarios where you can file a dispute:

  • Misrouted Returns

If a return was sent to the wrong financial institution, you can dispute it. The return should be rerouted to the correct ODFI.

  • Duplicate Returns

If the same transaction is returned more than once, it’s considered a duplicate. Contact the ODFI to resolve the issue.

  • Incorrect Information

Returns with incorrect information can also be disputed. For example, if the return code is R11 (Customer Advises Not Within Authorization Terms) but the transaction was authorized, you can contest it.

  • Time Frames

Returns must be processed within specific time frames. If a return is not made within the proper time frame, such as R01 (Insufficient Funds) which must be returned within 2 banking days, you can dispute it.

Disputes must be handled promptly. Dishonored returns should be sent within five banking days of the return settlement date. If the RDFI contests the dishonored return, recovery will need to occur outside the ACH network.

For more detailed information on handling ACH returns, visit Nacha Tech.

Frequently Asked Questions about ACH Return Codes and Time Frames

What are the ACH return codes?

ACH return codes identify why a payment was returned by the recipient’s bank. Each code begins with ‘R’ followed by a two-digit number. For example, R01 means “Insufficient Funds,” while R02 indicates “Account Closed.” These codes help financial institutions understand and communicate payment failures.

There are 85 distinct ACH return codes. The most common ones include:

  • R01: Insufficient Funds
  • R02: Account Closed
  • R03: No Account / Unable to Locate Account
  • R04: Invalid Account Number
  • R05: Unauthorized Debit

For a complete list, visit Nacha Tech.

How long does it take for an ACH to be returned?

The return time frame for ACH transactions varies by code. Generally, the return period is:

  • 2 banking days for most common codes like R01-R04.
  • 60 calendar days for unauthorized debits, such as R05 and R10.

If the return is not processed within these time frames, the originating bank can dispute it.

What is the timeframe for NACHA returns?

NACHA mandates different return deadlines depending on the reason code:

  • 2 banking days for codes like R01 (Insufficient Funds) and R02 (Account Closed).
  • 60 calendar days for unauthorized debits, such as R05 (Unauthorized Debit) and R10 (Originator Not Authorized).

For special cases like R06 (ODFI Requested Return), the time frame is undefined and determined by agreement between the ODFI and RDFI.

Understanding these time frames helps ensure compliance and prevents disputes. For more details, visit Nacha Tech.

Conclusion

Navigating ACH return codes and time frames can be challenging, but with the right tools and knowledge, it’s manageable. That’s where NachaTech comes in.

NachaTech and ACH Payment Processing

NachaTech specializes in simplifying ACH payment processing. We provide solutions that help financial institutions and businesses manage their ACH transactions efficiently. Our tools ensure that your ACH files are validated and edited correctly, reducing the chances of payment rejections.

Financial Institutions and Payment Validation

Financial institutions rely on accurate ACH processing to maintain smooth operations. NachaTech offers robust validation tools that catch errors before they cause problems. By ensuring that all ACH files are compliant with NACHA rules, we help you avoid costly mistakes and streamline your payment operations.

ACH File Editing

Editing ACH files can be complex, especially with the constant updates to NACHA rules. NachaTech makes this process easier with our user-friendly editing tools. Whether you need to correct account numbers, update routing information, or handle notices of change (NOC), we provide the resources you need to keep your transactions on track.

In summary, understanding ACH return codes and their respective time frames is crucial for compliance and efficiency. With NachaTech’s comprehensive tools and services, you can manage your ACH payments confidently.

To learn more about how NachaTech can help you with ACH payment processing, visit our service page.

By leveraging NachaTech’s expertise, you can ensure that your ACH transactions are processed smoothly and accurately, minimizing disruptions and enhancing your financial operations.

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