An ACH return happens when a customer’s bank rejects an ACH debit you initiated. You’ll receive a return code explaining why. Act quickly: many issues can be fixed or avoided with better validation, timing, and authorization.
What Is an ACH Return? (vs. Dispute)
· ACH Return: The debit fails and is sent back with a code (e.g., insufficient funds, invalid account).
· ACH Dispute: The debit succeeded, but the customer later claims it was unauthorized or improper; their bank may initiate a reversal under NACHA rules.
How Returns Flow
1. You submit an ACH debit (invoice, VT, recurring).
2. ODFI (your bank/processor) sends the entry to the network.
3. RDFI (customer’s bank) approves or rejects.
4. If rejected, the RDFI sends a return code back; you’re notified by Liftoff Platform with a plain-English reason and next steps.
Typical timing: Returns surface in 2–5 business days depending on the code and bank schedules.
Common Return Codes (What To Do)
· R01 – Insufficient Funds: Retry on payday or switch to card/RTP; notify customer before retrying.
· R02 – Account Closed: Get new bank details or alternate payment method.
· R03 – No Account / Unable to Locate: Verify routing/account numbers; recollect details securely.
· R04 – Invalid Account Number: Same as R03; confirm digits and account type.
· R08 – Payment Stopped: Contact customer to lift the stop or take alternate payment.
· R10 – Not Authorized/Improper: Collect a new NACHA-compliant authorization or use another method.
· R13 – Invalid Routing Number: Re-validate bank info; confirm correct institution.
· R16 – Account Frozen/OFAC: Do not retry; request a different account or payment method.
· R20 – Non-Transaction Account: Use a proper checking account; savings/loan accounts may be restricted.
· R29 – Corporate Not Authorized (CCD): Obtain correct corporate authorization; confirm SEC code.
Fees & Settlement
· Many processors assess $10–$15 per ACH return.
· If you void before settlement (pre-batch), you can often avoid extra fees; after settlement, it’s a refund and original processing fees may remain.
· Liftoff Platform provides transparent statements and clear notifications, so you know the exact cost and remedy for each return.
Compliance & Thresholds
NACHA enforces return-rate limits—especially for unauthorized categories (commonly targeted at 0.5%). Keep overall returns low and monitor unauthorized codes closely to avoid warnings or fines.
Prevention Playbook
Collect:
· Validate routing/account numbers at entry.
· Use the correct SEC code and NACHA-compliant authorization (keep records).
Pre-debit:
· Send reminder emails/SMS before the pull (amount/date).
· Allow customers to update bank info or choose an alternate method.
Retry Smartly:
· For R01, retry on known pay cycles, limit attempts.
· Don’t retry codes that require new authorization or new account details.
Alternatives:
· Offer card, RTP, or wire for urgent invoices or repeat returners.
Recordkeeping:
· Store authorizations and communications; document each remedy by code.
What To Do When You Get a Return (Checklist)
1. Read the code and message from Liftoff Platform.
2. Pick a remedy (see codes above).
3. Void if still pre-settlement; otherwise process a refund.
4. Contact the customer with a concise, friendly request for updated info/authorization.
5. Update your workflow (validation, reminders, SEC choice, retry timing).
Mini-FAQ
How long until I see a return?
Most returns appear within 2–5 business days.
Can I avoid the return fee?
If you catch the issue before settlement, voiding often avoids extra fees. After settlement, a refund may still incur the original processing fee.
What return rate is acceptable?
Aim to keep unauthorized returns below 0.5% and overall returns well below NACHA thresholds. Monitor weekly and address root causes quickly.
How Liftoff Platform Helps
· Clear return alerts with code-specific guidance.
· Invoicing, Virtual Terminal, Recurring Billing, and Payment Pages to reduce manual errors.
· Reporting to track return rates by code, improve authorization flows, and optimize retries.