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About ACH Returns

Learn more about when an ACH payment fails (ACHQ only)

Serena Edwards avatar
Written by Serena Edwards
Updated over 2 months ago

What is an ACH Return?

An ACH return is a notification that indicates the ACH Network was unable to collect or deposit funds in a receiver's account. This can happen for a variety of reasons, such as insufficient funds or incorrect account information. Similar to a credit card chargeback, an ACH return is something businesses aim to avoid but may sometimes face.

Who Issues ACH Returns?

ACH returns are typically issued by the RDFI (Receiving Depository Financial Institution), which is the bank or credit union that receives the ACH transaction (your customer's bank). However, in some cases, the ODFI (Originating Depository Financial Institution), which is ACHQ's bank, or even the ACH Operator may send the return.

Merchants will receive an email from Speedchex/ACHQ for any returned ACH payments. These returns will show up within Enrollsy as a failed ACH. See this article for more information about failed ACH payments.

Why Do ACH Returns Happen?

ACH returns can happen for a variety of reasons, including:

  1. Insufficient Funds: The receiver’s account lacks enough funds to cover the transaction.

  2. Account Closed: The account has been closed before the transaction can be completed.

  3. Invalid Account Number: The account details provided are incorrect or don’t exist.

  4. Authorization Revoked: The receiver has withdrawn authorization for the transaction.

  5. Payment Stopped: The receiver has placed a stop payment on the transaction.

  6. Bank Account Frozen: The account is restricted due to legal actions or suspected fraud.

  7. Duplicate Entry: The transaction was submitted more than once in error.

Each of these scenarios triggers an ACH return, signaling that the transaction cannot be processed as requested. Please view the following resources from ACHQ for more information on returns:

How Can Businesses Avoid ACH Returns?

Businesses can take several steps to avoid ACH returns, including:

  1. Verifying Account Information: Double-check account and routing numbers to ensure accuracy before processing payments.

  2. Obtaining Clear Authorization: Secure clear, documented consent from customers to authorize ACH transactions, reducing disputes.

  3. Monitoring Account Balances: Encouraging customers to keep sufficient funds in their accounts to cover ACH transactions.

  4. Setting Up Alerts: Implement notifications for customers when a scheduled ACH payment is due, reminding them to have adequate funds. This can be done in Enrollsy by editing the invoicing frequency.

  5. Educating Customers: Informing customers about the ACH process, timelines, and the importance of maintaining accurate and up-to-date account information.

By adopting these practices, businesses can reduce the likelihood of ACH returns and improve transaction success rates.

What Are the Timeframes for ACH Returns?

Returns initiated by the RDFI are only allowed within certain timeframes, as specified by Nacha operating guidelines. These timeframes may vary depending on the type of ACH transaction and the reason for the return. It is important for businesses to be aware of these timeframes and take appropriate action to resolve any issues that may lead to an ACH return.

See this resource for more about Nacha guidelines.

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