ACH Return CodesWhat Can Those Three Little Characters Tell You?

March 3, 2023 | 13 min read

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ACH Return Codes

In a Nutshell

Electronic bank-to-bank transfers in the US go through the ACH network. While the system is reliable, there are instances where a payment is returned and the merchant receives an ACH return code. What is a return code? What does it mean? In this post, we take a closer look at these codes, and offer a rundown of some of the most common responses.

What are ACH Return Codes? How Do You Avoid Losing Money Due to ACH Returns?

A lot of consumers (and even some merchants) have never heard of an automated clearinghouse, or ACH. Regardless, they probably still use one every single day.

Direct deposit of a paycheck? That goes through ACH. Paying bills online using your bank account? That goes through ACH. Merchants can even use ACH as a way of paying vendors.

It’s a great service.. but there’s still the potential for something to go wrong.

For instance, what if a customer’s payment gets returned? How does the merchant know, and how do they figure out why it happened?

What is an ACH Return?

ACH transfers are a digital method of moving money between banks, credit unions,  and other financial institutions, primarily within the US and its territories. The National Automated Clearinghouse Association (NACHA) oversees the ACH network, and reports that some 30 billion payments were processed through the network in 2022. However, not all of these transactions will ultimately be completed.

If a transaction fails to process, one of the banks involved in the process may receive an ACH return. This is a way of informing the institution that the amount in question either could not be collected from, or deposited into, the appropriate account. 


To understand ACH returns and ACH return codes, you need to know these two important acronyms: ODFI and RDFI.

“ODFI” stands for “Originating Depository Financial Institution,” while “RDFI” means “Receiving Depository Financial Institution.” The ODFI is the party who initiates the process on behalf of the payer (“The Originator”). The RDFI is the financial institution who receives the credit or debit on behalf of the payee (“the Receiver”).

An ACH return is a message, typically sent by an RDFI, that informs an ODFI that the ACH Network either couldn’t collect funds, or couldn’t deposit funds, into the receiver’s account.

You can think of a return as the electronic version of a bounced check. But, while bounced checks are generally caused by insufficient funds, that’s only one of multiple reasons why an ACH return may happen.

Valid Reasons for an ACH Return

A consumer will usually need to submit a Written Statement of Unauthorized Debit (WSUD) to initiate an ACH return. This is a form which bank customers fill out if they find incorrect or invalid debits on their accounts.

The WSUD is supplied by the financial institution where the charge took place. Submitting one initiates the process of reversing an ACH debit that the user claims was unauthorized.

Legitimate reasons to consider an ACH dispute include:

  • The payment failed due to incorrect information details
  • The transaction was misrouted and therefore incorrectly processed
  • The payment failed due to a duplicate entry
  • A credit was unintentionally sent to the receiver during the return process
  • The payment was not returned within the NACHA-mandated timeframe

The party responsible for a failed ACH transaction will get hit with an ACH return fee, which typically ranges from $2-5 per occurrence.

A “lack of authorization” return, for example, will often result in a fee for the RDFI. Returns that stem from insufficient funds, however, will likely mean a fee charged to the customer’s account. Going back to our earlier analogy, think of it like a bounced check fee, but for electronic bank transfers.

What is an ACH Return Code?

ACH Return Codes

[noun]/ā • cē • eɪCH • rə • tərn • kōd/

An ACH return code is a 3-digit alphanumeric indicator attached to a returned ACH transaction. The code is meant to explain why an ACH transfer could not be processed.

Each return includes a three-character ACH return reason code that can point the recipient to additional details, and help explain why the return happened.

There are over 80 unique return codes, and each one represents a different type of return. ACH return codes are a type of shorthand for specific information concerning the return, much like the card decline codes or dispute reason codes used by credit card networks.

All ACH return reason codes consist of the letter “R” followed by two numbers (R01, R12, R22, etc.). There are also specific return time frames, which can differ between codes.

ACH Return Codes: The Complete List

With ACH transactions, there are dozens of possible return request scenarios. However, most returns happen for a few common reasons. With that in mind, let’s look at a few of the most frequently used ACH return reason codes, along with the time frames in which an ACH return may be requested using these codes:

Return CodeReason for ReturnDescriptionResponse Time Frame
R01Insufficient FundsInsufficient balance to process transaction2 banking days
R02Account ClosedPreviously active account has been closed2 banking days
R03Unable to Locate AccountAccount number structure is valid, but doesn’t match the entry or is not an open account2 banking days
R04Invalid Account NumberIncorrect account number structure2 banking days
R05Unauthorized Debit to Consumer Account via Corporate SEC CodeAn unauthorized debit entry was transmitted to a consumer account60 calendar days
R06ODFI Requested ReturnThe Originator’s bank asked for the return60 calendar days
R07Authorization Revoked by CustomerConsumer revoked a previously authorized entry60 calendar days
R08Payment StoppedThe Receiver requested the stop payment of an ACH debit entry2 banking days
R19Uncollected FundsSufficient balance exists, but requested amount brings available balance below amount of debit entry2 banking days
R10Customer Claims Originator Is Not Known to/Is Authorized to Debit Receiver’s AccountReceiver has no relationship with the Originator or has not authorized the Originator to debit the account60 calendar days
R11Customer Advises Entry Not in Accordance with the Terms of the AuthorizationDebit was inaccurate or improperly initiated; source document was ineligible; notice was not provided to the Receiver; or amount was inaccurately obtained60 calendar days
R16Account FrozenFunds unavailable due to action by the RDFI or legal action2 banking days
R20Non-Transaction AccountThe RDFI’s policies restrict activity to account2 banking days

Again, those are just the return reason codes you’re most likely to see attached to an ACH return request. There are plenty of others, from non-compliance with state or local regulations to situations where one or the other party is deceased.

You can click below to check out a complete list of ACH return codes:

Return CodeReason for ReturnResponse Time Frame
R12Account Sold to Another DFI2 banking days
R13Invalid ACH Routing No.Next file delivery time after processing
R14Representative Payee Deceased2 banking days
R15Beneficiary / Account Holder Deceased2 banking days
R17File Record Edit Criteria / Suspicious Entry with Invalid Account No. / Return of Improperly-Initiated Reversal2 banking days
R18Improper Effective DateNext file delivery time after processing
R19Amount Field ErrorNext file delivery time after processing
R21Invalid Company ID2 banking days
R22Invalid Individual ID2 banking days
R23Receiver Refused CreditRDFI must transmit return upon receipt of refusal
R24Duplicate Entry2 banking days
R25Addenda ErrorNext file delivery time after processing
R26Mandatory Field ErrorNext file delivery time after processing
R27Trace Number ErrorNext file delivery time after processing
R28Routing No. Check Digit ErrorNext file delivery time after processing
R29Not Authorized by Corporate Customer2 banking days
R30RDFI not in Check Truncation ProgramNext file delivery time after processing
R31Permissible Return (CCD and CTX only)N/A
R32RDFI Non-SettlementNext file delivery time after processing
R33Return of XCK60 calendar days
R34Limited Participation DFINext file delivery time after processing
R35Improper DebitNext file delivery time after processing
R36Improper CreditNext file delivery time after processing
R37Source Document Presented60 calendar days
R38Stop Payment on Source Document60 calendar days
R39Improper Source Document2 banking days
R40Return of ENRN/A
R41Invalid Transaction CodeN/A
R42Routing No. / Check Digit ErrorN/A
R43Invalid DFI Account No.N/A
R44Invalid Individual ID No.N/A
R45Invalid Individual / Company NameN/A
R46Invalid Representative Payee IndicatorN/A
R47Duplicate EnrollmentN/A
R50State Law Affecting RCK AcceptanceN/A
R51Ineligible / Improper Item Related to RCKN/A
R52Stop Payment on Item Related to RCK60 calendar days
R53Item and RCK Presented for Payment60 calendar days
R61Misrouted Return60 calendar days
R62Erroneous / Reversing Debit60 calendar days
R67Duplicate ReturnN/A
R68Untimely ReturnODFI must transmit return within 5 business days
R69Field ErrorODFI must transmit return within 5 business days
R70Permissible Return Not Accepted / Not Requested by ODFIODFI must transmit return within 5 business days
R71Misrouted Dishonored ReturnODFI must transmit return within 5 business days
R72Untimely Dishonored ReturnODFI must transmit return within 5 business days
R73Timely Original ReturnODFI must transmit return within 5 business days
R74Corrected ReturnN/A
R75Return Not DuplicateODFI must transmit return within 5 business days
R76No Errors FoundContested return must be transmitted within 2 business days
R77Non-Acceptance of R62Contested return must be transmitted within 2 business days
R80IAT Coding ErrorContested return must be transmitted within 2 business days
R81Non-Participant in IAT ProgramContested return must be transmitted within 2 business days
R82Invalid Foreign RDFI IdentificationContested return must be transmitted within 2 business days
R83Foreign RDFI Unable to SettleContested return must be transmitted within 2 business days
R84Not Processed by GatewayN/A
R85Incorrectly Coded Outbound Int’l Payment2 banking days
Did You Know?

ACH transactions can be defined as being either “pushed,” meaning the payer initiates the transfer of funds from their bank account, or “pulled,” meaning the payee has the authorization to collect funds directly from the payer's account.

ACH Returns vs. Chargebacks: What’s the Difference?

Some people confuse ACH returns with chargebacks, to the point that they’re sometimes described as “ACH chargebacks.” However, ACH returns and chargebacks are two very different things.

Cardholders and financial institutions are hyper-aware of the threat posed by card fraud. As a result, cardholders can dispute credit card charges and often get chargebacks filed on their word alone. Money can then be removed from the merchant’s account without warning, even months after the transaction. 

There is a formal process by which merchants can fight the chargeback, and the card network may even be called in to make a final judgment. However, the odds of success are relatively low.

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ACH transactions, on the other hand, are cleared between banks automatically, even before the customer’s bank verifies the account balance. If there turns out to be an issue, however, the amount has to be refunded within two days. Sometimes the ACH operative will even hold the money for 3-5 days, making sure everything is clear before releasing the funds to the receiver.

With ACH transactions, there’s really nothing here to “charge back.” This is a simple return, usually with no direct involvement from the customer or the merchant.

Dishonoring ACH Returns

What if an ACH return was not properly authorized, though? Maybe an ACH return is submitted, but the reason given is not valid? In this case, the party that received the ACH return notification can request that the ACH return be reversed, or “dishonored.”

Dishonoring an ACH return can be done under the following circumstances:

Untimely Return

The ACH return was not issued within the proper, allowable time frame for a return.


The ACH return was issued incorrectly, or the claim made by the initiating party is not true.


The ACH return was routed to the wrong account.


The ACH return is a duplicate of another return that had already been issued.

In any of the above cases, an ACH return issuance would result in an unintended credit being granted to one person’s account. So, there would be grounds for that ACH return to be canceled.

Keep in mind, however, that there is a very tight deadline for requesting that a return be dishonored. A dishonored return must be transmitted within five banking days of the return settlement date.

Tips for Avoiding ACH Return Codes

ACH returns are bad news for everyone. 

For merchants, the damage comes in the form of lost revenue from bank transfers that are ultimately reversed. For ODFIs, too many ACH returns could actually lead to the loss of network privileges. This can happen if the ODFI breaches any of the following thresholds within a 60-day period:

Return TypeThreshold, as % of Total ACH TransactionsCalculated Based on Return Codes
Administrative3%R02, R03, and R04
Unauthorized0.5%R05, R07, R10, R29, and R51
Overall15%All return codes

Many customer issues, such as insufficient funds, are beyond merchants’ and banks’ control. Nevertheless, adhering to best practices can help:

  • Ensure routing numbers, account numbers, and transit numbers are entered correctly.
  • Maintain strict compliance with all NACHA requirements.
  • Keep an eye out for excessive returns tied to individual users.
  • Validate that the account is active and is set up for ACH transfers.
  • Check that the account is set up to receive the type of transaction in question.
  • Define a set time frame for users to cancel a transaction, in case of unintended authorization.

Final Thoughts

ACH transfers can be a low-hassle way to send or receive money. For merchants, it is a viable alternative payment option that could make customers happy. 

Even with precautions in place, however, sometimes ACH payments will fail to go through.

As a merchant, you need to have a plan in place to accept payments when ACH transfers are not available. You also need to have a way of recovering funds lost if an ACH transfer goes wrong.

Talk to one of our experts today about developing a broader, more comprehensive solution for payments and risk mitigation.


What is an ACH return?

You can think of an ACH return as the electronic version of a bounced check. An ACH return is a message, typically sent by an RDFI, that informs an ODFI that the ACH Network either couldn’t collect funds, or couldn’t deposit funds, into the receiver’s account.

What happens when ACH is returned?

If a transaction fails to process, one of the banks involved in the process may receive an ACH return. This is a way of informing the institution that the amount in question either could not be collected from, or deposited into, the appropriate account. The transfer can then be reattempted, or another payment method may be used.

Why does an ACH payment get returned?

There is a wide range of situations that could lead to a returned ACH payment. Some of the most common are insufficient funds, revoked authorization, or an invalid account number.

What are ACH return charges?

Having an ACH transfer returned typically involves a fee. On average, ACH return fees range from $2-$5 per occurrence.

Can an ACH payment be charged back?

No, ACH return chargebacks can’t really happen. Certain return cases can be disputed, if they were not properly authorized; a process called an ACH return. However, this is distinct from the chargeback process, which is limited only to credit and debit cards.

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