ACH NOC Return Codes: Top 10 Essential Facts in 2024

ACH NOC return codes are essential for financial institutions that use the ACH network to transfer money electronically between banks. If you’re quickly looking for what ACH NOC return codes are, here’s the gist:

1. NOC stands for Notification of Change.
2. Used to correct or change customer bank account information.
3. Created by RDFI (Receiving Depository Financial Institution).
4. Must be acted upon within 6 days, per Nacha rules.

ACH payments form the backbone of electronic, bank-to-bank transactions in the United States. Managed by the National Automated Clearing House Association (Nacha), these payments allow for smooth and efficient money transfers. However, errors do occur, and that’s where ACH NOC return codes come into play.

When issues like incorrect bank account numbers or outdated routing information arise, the RDFI sends an NOC to the ODFI (Originating Depository Financial Institution) to rectify these errors. Financial institutions must then update their records promptly, following strict Nacha rules, to avoid disruption in future transactions.

What are ACH NOC Return Codes?

ACH NOC return codes, also known as Notification of Change (NOC) codes, are essential for maintaining the accuracy and efficiency of ACH transactions. These codes are used to communicate necessary updates or corrections to information involved in ACH transactions.

When an error is detected, the Receiving Depository Financial Institution (RDFI) sends an NOC to the Originating Depository Financial Institution (ODFI). This NOC identifies the specific issue, like an incorrect bank account number or outdated routing information, and provides the correct details. The ODFI must then update its records to ensure future transactions proceed smoothly.

Why Are NOC Return Codes Important?

NOC return codes are crucial for several reasons:

1. Accuracy: They help ensure that customer records are accurate and up-to-date.
2. Compliance: Financial institutions must follow Nacha rules to avoid penalties and disruptions.
3. Efficiency: Correcting errors promptly prevents delays and additional costs associated with failed transactions.

How Do They Work?

Here’s a simple breakdown of the process:

1. Error Detection: An error is detected in an ACH transaction, such as an incorrect account number.
2. NOC Issuance: The RDFI issues an NOC to the ODFI.
3. Record Update: The ODFI updates its records with the correct information.
4. Future Transactions: Future transactions proceed without issues, thanks to the updated information.

Compliance with Nacha Rules

Financial institutions must comply with strict Nacha rules when handling NOCs. These rules dictate:

• Timeliness: Updates must be made promptly, usually within six banking days.
• Accuracy: The information provided in the NOC must be precise to prevent recurring issues.
• Documentation: Proper records of the changes must be maintained for compliance and auditing purposes.

By adhering to these rules, financial institutions can minimize disruptions and maintain the integrity of the ACH network.

Next, let’s dive into the most common ACH NOC return codes and what they mean.

Common ACH NOC Return Codes

Understanding ACH NOC return codes is crucial for handling transactions efficiently. Here are the most common codes you might encounter:

C01 – Incorrect Bank Account Number

The C01 code indicates that the bank account number provided is incorrect. This often happens due to data entry errors or bank mergers. When you receive a C01 code, double-check the account number and update your records accordingly.

C02 – Incorrect Transit/Routing Number

The C02 code signifies an incorrect transit or routing number. This can occur during bank mergers or when using an outdated routing number. Ensure you use the preferred routing number to avoid this issue.

C03 – Incorrect Transit/Routing Number and Bank Account Number

The C03 code is a combination of C01 and C02. It means both the bank account number and the transit/routing number are incorrect. This often happens during mergers, requiring updates to both fields.

C04 – Bank Account Name Change

The C04 code indicates that the name associated with the bank account has changed. This could be due to rebranding or other bank name changes. Update the account name in your records to reflect the new information.

C05 – Incorrect Payment Code

The C05 code suggests that the payment code is incorrect. This typically involves changing the account type from savings to checking or vice versa. Verify the account type and make the necessary adjustments.

C06 – Incorrect Bank Account Number and Transit Code

The C06 code is a combination of C01 and C05. It indicates both the bank account number and the transaction code are incorrect. This requires updating both the account number and the account type.

C07 – Incorrect Transit/Routing Number, Bank Account Number, and Payment Code

The C07 code combines C01, C02, and C05. It means there are multiple errors: the transit/routing number, bank account number, and payment code are all incorrect. This often happens in complex changes, like mergers, necessitating updates to multiple fields.

C09 – Incorrect Individual ID Number

The C09 code indicates an incorrect individual ID number. This number is used to identify the specific employee you are paying. Data entry errors often cause this issue, so double-check the ID number and update it in your records.

C10 – Incorrect Company Name

The C10 code suggests that the company name has changed. This is common in vendor relationships where a company might rebrand. Update your records to reflect the new company name to ensure smooth transactions.

C11 – Incorrect Company Identification

The C11 code means that the company ID has changed. This is also common in vendor relationships. Ensure you have the correct company ID to avoid any transaction issues.

C12 – Incorrect Company Name and Company ID

The C12 code is a combination of C10 and C11. It indicates that both the company name and the company ID have changed. Update both fields in your records to maintain accurate vendor information.

By understanding these common ACH NOC return codes, you can quickly identify and correct errors, ensuring seamless transactions and compliance with Nacha rules.

Next, we will explore how to handle ACH NOC return codes effectively.

How to Handle ACH NOC Return Codes

Handling ACH NOC return codes is crucial to ensure smooth transactions and avoid any disruptions. Here’s how you can effectively manage these notifications:

Update Records Promptly

When you receive an ACH Notification of Change (NOC), it’s essential to update your records as soon as possible. The NOC provides updated information about your customer’s bank account details, which may have changed due to mergers, rebranding, or data entry errors.

Example: If you receive a C01 code indicating an incorrect bank account number, immediately update the account number in your system to avoid future transaction failures.

Follow the 6-Day Rule

Banks typically allow up to 6 banking days to update your records after sending an NOC code. This timeframe ensures you have enough time to make the necessary changes without causing further issues.

Important: Make these updates promptly to avoid additional costs, processing fees, or customer service issues.

Avoid Reprocessing the Same Transaction

Do not attempt to reprocess the transaction that triggered the NOC. The bank handles it the first time around, and reprocessing can lead to duplicate entries or further errors.

Tip: Instead, focus on correcting the information for future transactions.

Customer Service Issues

Failing to update records can lead to transaction failures, resulting in unhappy customers and strained business relationships. Ensuring your data is accurate helps maintain customer trust and satisfaction.

Case Study: A company ignored multiple C09 NOC codes indicating incorrect individual ID numbers. As a result, payments were delayed, causing frustration among employees and vendors.

By promptly addressing ACH NOC return codes, you can streamline your payment processes and maintain positive relationships with your customers and vendors.

Next, we will provide an overview of ACH return codes, including common and less common codes you might encounter.

ACH Return Codes Overview

ACH return codes are used when a bank needs to return a payment due to issues like insufficient funds or an invalid account number. These codes help identify the reason for the return and ensure that the transaction is handled properly.

Common ACH Return Codes

Here are some of the most frequent ACH return codes you might encounter:

• R01 – Insufficient Funds: The account doesn’t have enough money to cover the transaction.
• R02 – Account Closed: The account has been closed by the receiver.
• R03 – No Account/Unable to Locate Account: The account number provided does not exist.
• R04 – Invalid Account Number: The account number is invalid or formatted incorrectly.
• R05 – Unauthorized Corporate Debit to Consumer Account: A corporate-to-consumer debit was not authorized.
• R06 – Returned per ODFI Request: The originating bank requested the return.
• R07 – Authorization Revoked by Customer: The customer revoked authorization for the transaction.
• R08 – Payment Stopped: The customer requested a stop payment on the transaction.
• R09 – Uncollected Funds: The funds in the account are not available.
• R10 – Customer Advises Not Authorized: The customer claims the transaction was not authorized.
• R11 – Customer Advises Entry Not in Accordance with the Terms of the Authorization: The transaction did not follow the terms agreed upon.
• R12 – Account Sold to Another DFI: The account has been transferred to another financial institution.
• R13 – Invalid ACH Routing Number: The routing number is invalid.
• R14 – Representative Payee Deceased/Incapacitated: The account holder’s legal representative is deceased or incapacitated.
• R15 – Beneficiary or Account Holder Deceased: The account holder or beneficiary is deceased.

Less Common ACH Return Codes

While less frequent, these codes are still important to know:

• R16 – Account Frozen/Entry Returned per OFAC Instruction: The account is frozen or under Office of Foreign Assets Control (OFAC) restrictions.
• R17 – File Record Edit Criteria: The file record doesn’t meet the required criteria.
• R18 – Improper Effective Entry Date: The effective date of the transaction is incorrect.
• R19 – Amount Field Error: There is an error in the amount field of the transaction.
• R20 – Non-Transaction Account: The account is not set up to handle transactions.
• R21 – Invalid Company Identification: The company ID is incorrect.
• R22 – Invalid Individual ID Number: The individual ID is incorrect.
• R23 – Credit Entry Refused by Receiver: The receiver 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 incorrect.
• R29 – Corporate Customer Advises Not Authorized: The corporate customer claims the transaction was not authorized.
• R30 – RDFI Not Participant in Check Truncation Program: The receiving bank does not participate in the check truncation program.
• R31 – Permissible Return Entry (CCD and CTX only): The return entry is permissible for CCD and CTX transactions.
• R32 – RDFI Non-Settlement: The receiving bank cannot settle the transaction.
• R33 – Return of XCK Entry: The XCK entry is being returned.
• R34 – Limited Participation DFI: The receiving bank has limited participation in the ACH network.
• 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 has been presented for payment.
• R38 – Stop Payment on Source Document: A stop payment has been placed on the source document.
• R39 – Improper Source Document/Source Document Presented for Payment: The source document is improper or has already been presented.

International ACH Transaction (IAT) Return Codes

These codes are used for international transactions:

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

Understanding these ACH return codes helps you manage returns efficiently and ensures smoother financial transactions.

Next, we will address some frequently asked questions about ACH NOC return codes and how to handle them effectively.

Frequently Asked Questions about ACH NOC Return Codes

What is an ACH NOC?

An ACH NOC (Notification of Change) is a message sent by the Receiving Depository Financial Institution (RDFI) to inform the Originating Depository Financial Institution (ODFI) that there is updated information regarding a customer’s bank account. This might include changes to the bank account number, transit/routing number, or other key account details.

NOCs ensure that future transactions are processed correctly by providing the necessary updates to the account information.

How do I update my records after receiving an ACH NOC?

When you receive an ACH NOC, it’s crucial to act promptly. Here’s what you need to do:

1. Identify the Change Code: Understand the specific change required by looking at the NOC code. For example, C01 indicates an incorrect bank account number, while C02 indicates an incorrect routing number.

2. Update Your Records: Make the necessary adjustments in your system. For instance, if you receive a C01 code, update the bank account number as specified.

3. Verify the Changes: Double-check the updated information to ensure accuracy. Incorrect data entry can lead to further issues.

4. Comply with the 6-Day Rule: According to Nacha rules, you have up to six banking days to update your records. It’s best to do this as soon as possible to avoid any processing delays.

What happens if I don’t update my records after receiving an ACH NOC?

Failing to update your records after receiving an ACH NOC can lead to several problems:

• Processing Fees: Banks may charge additional fees for transactions that continue to use outdated information.

• Customer Service Issues: Repeated payment failures can frustrate customers and damage your business relationships.

• Transaction Failures: Future transactions using incorrect information are likely to fail, leading to delays and potential financial losses.

To avoid these issues, ensure you promptly and accurately update your records as specified in the NOC. This will help maintain smooth financial operations and customer satisfaction.

Conclusion

In ACH payments, understanding and handling ACH NOC return codes is crucial for smooth transactions. Promptly updating your records based on these notifications can save you from processing fees, customer service issues, and transaction failures.

NachaTech stands out as a robust solution to help you navigate the complexities of ACH file validation. Our technology not only identifies and rectifies major errors but also provides raw line editing capabilities and fast ABA number validation. This proactive approach ensures your ACH files are accurate and compliant with NACHA standards, minimizing the chances of payment rejections.

By leveraging NachaTech, you can streamline your financial operations and maintain strong relationships with your clients. Our software is designed to keep your transactions flowing smoothly, preventing the common pitfalls of ACH payment rejections.

Ready to streamline your ACH processing? Discover how NachaTech can help.

We hope this guide has clarified everything you need to know about ACH NOC return codes. Keeping your records up-to-date and using advanced tools like NachaTech can make a significant difference in your financial operations.