ACH return codes : reasons and meanings

Looking for the meaning of a particular code? Jump to our list of ACH return codes and definitions.

Understanding ACH returns, the reasons behind them, and how to handle them is the best way to ensure the ACH process remains as smooth as possible for your business. So, what happens if an ACH payment is returned? We’ve got you covered. Find out everything you need to know about ACH return codes, including our comprehensive ACH return code list, right here.

What are ACH returns?

ACH payments are a type of electronic bank-to-bank payment for businesses based in the U.S. An ACH return simply means that – for whatever reason – the ACH couldn’t collect the funds from the customer’s account. This results in an ACH return reason code, a three-character code that provides a little more detail about the specific nature of the problem.

Can ACH payments be returned?

Yes, ACH payments can be returned, and it’s a normal part of standard ACH processing. There are a broad range of reasons for returned ACH payments, including insufficient funds, revoked authorization, or an invalid account number.

Key terms to know about ACH return reason codes

There are over 80 different ACH return codes. We’ll go over them momentarily, but first, let’s take a look at some of the key terms that you’re likely to come across when you read about ACH returns:

• ODFI – Standing for Originating Depository Financial Institution, the ODFI is a financial institution that has an agreement with an ACH operator (either The Clearing House or the Federal Reserve) to transmit Entries into the ACH network on behalf of an originator. Most major banks are ODFI-approved, meaning that they’re able to send ACH money transfers, while payment processors, payment gateways, and ACH payment APIs may also be considered ODFIs.

• RDFI – Standing for Receiving Depository Financial Institution, the RDFI is the bank that is being charged (debited) or refunded (credited). Like ODFIs, major banking institutions are generally RDFI-approved, as are many third-party payment processors and payment gateways.

Most common ACH return reason codes

Now that you know a little more about the meaning behind ODFI and RDFI, here are some of the most common ACH return codes:

Those are the main ACH return reason codes that you’re likely to encounter on a day to day basis, but there are plenty of other, less common ACH return codes that you could run across. Here’s a little more information about what they relate to.

Less common ACH return reason codes

• R11 – Check Truncation Entry Return: This code is only used when returning a check truncation.

• R12 – Branch Sold to Another DFI: A financial institution received an Entry to an account that has been sold to another financial institution.

• R13 – Invalid ACH Routing Number: The Entry contains a Gateway Identification or Receiving DRI Identification that isn’t a valid ACH routing number.

• R14 – Representative Payee Deceased or Unable to Continue in that Capacity: The representative payee is either deceased or no longer able to continue in their original capacity (i.e., legally incapacitated adult).

• R15 – Beneficiary or Account Holder Deceased: Either the beneficiary or the account holder is deceased.

• R16 – Account Frozen/Entry Returned per OFAC Instruction: Access to the account has been restricted due to legal action or specific action undertaken by the RDFI, or the OFAC (The Office of Foreign Assets Control of the US Department of the Treasury) has instructed the Gateway or RDFI to return the Entry.

• R17 – File Record Edit Criteria: The RDFI is unable to process certain fields.

• R18 – Improper Effective Entry Date: The effective Entry date for a credit Entry is over two banking days after the processing banking day.

• R19 – Amount Field Error: Either the account field is non-numeric, zero, or exceeds $25,000.

• R20 – Non-Transaction Account: The Entry was destined for a non-transaction account, i.e., an account against which transactions are limited or prohibited.

• R21 – Invalid Company Identification: The company identification information provided isn’t valid.

• R22 – Invalid Individual ID number: Used for CIE and MET Entries when the original ID number hasn’t been used and the receiver has indicated to the RDFI that the number with which the Originator has been identified isn’t correct.

• R23 – Credit Entry Refused by Receiver: The receiver has returned the Entry, i.e., because the minimum amount hasn’t been remitted.

• R24 – Duplicate Entry: The date, dollar amount, trace number, and other data matches another transaction.

• R25 – Addenda Error: The addenda record indicator value is either incorrect, out of sequence, or missing.

• R26 – Mandatory Field Error: There is missing or erroneous data in a mandatory field.

• R27 – Trace Number Error: The Original Entry trace number isn’t present or doesn’t correspond with the addenda record for a return or notification of change Entry.

• R28 – Routing Number Check Digit Error: The check digit provided for the routing number isn’t valid.

• R29 – Corporate Customer Advises Not Authorized: The receiver has notified the RDFI that a specific Entry hasn’t been authorized.

• R30 – RDFI Not Participant in Check Truncation Program: The RDFI doesn’t participate in a check truncation program.

• R31 – Permissible Return Entry (CCD and CTX only): RDFIs may return CCD or CTX Entries that ODFIs accept.

• R32 – RDFI Non-Settlement: The RDFI is unable to settle the Entry.

• R33 – Return of XCK Entry: Used to return XCK Entries (at the discretion of the RDFI).

• R34 – Limited Participation DFI: The RDFI’s state/federal supervisor has limited their participation.

• R35 – Return of Improper Debit Entry: Debit Entries aren’t permitted for loan accounts or CIE Entries (except in the case of reversing Entries).

• R36 – Return of improper Credit Entry: ACH Credit Entries aren’t permitted to use with ARC, BOC, POP, RCK, TEL, and XCK (except in the case of reversing Entries).

• R37 – Source Document Presented for Payment: The source document that an ARC, BOC, or POP Entry relates has been presented for payment.

The following codes are far less common, but it’s always a good idea to have a handle on some of the more esoteric issues you could encounter with ACH returns:

R38 – Stop Payment on Source Document R39 – Improper Source Document/Source Document Presented for Payment R40 – Return of ENR entry by Federal Government Agency R41 – Invalid Transaction Code R42 – Routing Number/Check Digit Error R43 – Invalid DFI Account Number R44 – Invalid Individual ID Number/Identification Number R45 – Invalid Individual Name/Company Name R46 – Invalid Representative Payee Indicator R47 – Duplicate Enrollment R50 – State Law Affecting RCK Acceptance R51 – Item Related to RCK Entry is Ineligible or RCK Entry is Improper R52 – Stop Payment on Item Related to RCK Entry R53 – Item and RCK Entry Presented for Payment R61 – Misrouted Return R62 – Return of Erroneous or Reversing Debt R67 – Duplicate Return R68 – Untimely Return R69 – Field Error(s) R70 – Permissible Return Entry Not Accepted/Return Not Requested by ODFI R71 – Misrouted Dishonored Return R72 – Untimely Dishonored Return R73 – Timely Original Return R74 – Corrected Return R75 – Return Not a Duplicate R76 – No Errors Found R77 – Non-Acceptance of R62 Dishonored Return

Finally, the following codes are used for International ACH Transactions (IAT). You can only expect to deal with these ACH return codes if you’re dealing with the office of a financial agency that isn’t within the US.

• R80 – IAT Entry Coding Errors

• R81 – Non-Participant in IAT Program

• R82 – Invalid Foreign Receiving DFI Identification

• R83 – Foreign Receiving DFI Unable to Settle

• R84 – Entry Not Processed by Gateway

• R85 – Incorrectly Coded Outbound International Payment

What happens if an ACH payment is returned?

ACH debit returns are generated by the receiving depository financial institution (RDFI) in response to a transaction. Many people believe that after an ACH transaction has been finalized, the process is complete – but that’s not the case. For a variety of reasons, an ACH operator may request the funds be returned. So, how do returned ACH payments work in practice?

Put simply, when a request is submitted to an ACH operator, the funds are granted. Then, the request is dispatched to the bank holding the accounts, and if the request cannot be fulfilled, the operator requires them to be returned. ACH return codes are the method by which the money is taken back.

It’s also worth brushing up on the concept of “notice of change” (NOC), as this can play a part in the ACH debit return process. Basically, a customer’s bank account information may change as a result of changes in account numbering schemes, bank mergers, and so on.

If this happens, businesses that submit an ACH request using outdated information will have their request processed, but updated information about the account will be sent back to them. This updated information is referred to as a notice of change, and it requires the submitter to update the customer’s bank account information before the next request is submitted.

If outdated information continues to be used in subsequent requests, the transaction may not be able to be processed, leading to an ACH debit return.

What’s the time frame for an ACH debit return?

Generally speaking, ACH return codes have a turnaround time of two banking days. However, certain ACH return reason codes may have a slightly longer turnaround time. For instance, unauthorized debits to consumer accounts tend to have a 60-day return timeframe, as banking regulations are relatively consumer-friendly.

How much are ACH return fees?

It’s always a good idea to get a better understanding of the fees involved with the ACH system. On average, ACH return fees range from $2-$5 per return.

Can returned ACH payments be disputed?

Yes, if the return meets any of the following criteria, you can request the ODFI dishonor the return:

• Was misrouted

• Was a duplicate

• Incorrect information

• Not returned within the proper time frames

• Resulted in unintended credit to the receiver related to the reversal process

Dishonored returns must be sent within five banking days of the return settlement date, and they can be contested by the RDFI. If this happens, then recovery will need to take place outside of the ACH network.

We can help

GoCardless helps you automate payment collection using ACH bank debit, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.