Why an ACH (bank transfer) payment may be returned

An ACH payment is a type of bank transfer. Instead of using a credit or debit card, the money moves directly from one bank account to another through the Automated Clearing House (ACH) network. An ACH return means the payment couldn’t be completed because the funds couldn’t be collected from your customer’s bank account.

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. Click here to jump to our list of common ACH return reasons.

What to do if you have an ACH payment returned

Autobooks will send you an email notification whenever an ACH payment is returned. We will include the reason ACH gave us for the returned payment. The payment will be debited out of your business checking account.

NOTE: ACH payments are typically returned 5-7 business days from the date your customer paid you.

You will need to contact your customer to arrange for a new payment:

• For Invoice payments: the invoice status will revert back to Unpaid. Ask your customer to either verify the bank info they used to make their payment and try again, or use a different account or card.
• For Payment Link payments: the payment will be removed from your payment list. Ask your customer to make a new payment to you via your payment link.

Common ACH Return reasons

• Insufficient Funds (R01)
  What It Means: The account doesn't have enough money to cover the transaction.

• Account Closed (R02)
  What It Means: The customer's previously active account has been closed.

• No Account/Unable to Locate Account (R03)
  What It Means: The account number is either incorrect or the account doesn't exist.

• Invalid Account Number (R04)
  What It Means: The account number provided is incorrect.

• Unauthorized Debit Entry (R05)
  What It Means: The customer has disputed the transaction.
  What to Do: Discuss the issue with your customer to resolve the dispute or propose an alternative payment.

• Returned per the issuing bank request (R06)
  What It Means: The transaction was disputed or rejected at the request of the originating institution.
  What to Do: Work with your customer to resolve the dispute.

• Authorization Revoked by Customer (R07)
  What It Means: The customer has canceled their authorization for the payment.
  What to Do: Contact the customer to understand the issue or discuss another payment option.

• Payment Stopped (R08)
  What It Means: The customer has halted a recurring debit payment by contacting their bank.
  What to Do: Resolve any disputes or discuss different payment arrangements with your customer.

• Uncollected Funds (R09)
  What It Means: Insufficient available balance to cover the debit.

• Customer Advises Not Authorized (R10)
  What It Means: The customer states the transaction wasn't authorized.
  What to Do: Clarify and rectify any issues with your customer then find an alternate payment method.

• Customer Advises Entry Not in Accordance with the Terms of the Authorization (R11)
  What It Means: There's an error with the payment terms, like incorrect amount or timing.
  What to Do: Address the error with your customer or suggest another payment method.

• Branch Sold to Another DFI (R12)
  What It Means: The account's bank or credit union branch has changed ownership.

• RDFI Not Qualified to Participate (R13)
  What It Means: The receiving institution can't participate in ACH, or the routing number is wrong.

• Beneficiary or Account Holder Deceased (R15)
  What It Means: The account owner has passed away.
  What to Do: Payments cannot be accepted from this customer.

• Account Frozen (R16)
  What It Means: The account is frozen due to bank or legal actions.
  What to Do: Request an alternative payment method from your customer.