An ACH reject can occur for a number of reasons. For example, the bank account may be frozen or lack sufficient funds to cover the transaction.
There are a few ways to handle ACH rejects and, depending on the reason, some transactions may be corrected, resubmitted, and approved.
Here are some of the more common rejection codes, what they mean and how to rectify the issue.
Insufficient funds (R01)
The available and/or cash reserve balance is not sufficient to cover the dollar value of the debit Entry.
Suggestion: Try the transaction again up to two times within 180 days of the original authorization date.
Account Closed (R02)
A previously active account has been closed by action of the customer or the RDFI.
Suggestion: Contact your customer for a different bank account. If you have not yet provided the goods or provided the services covered by the payment, you may want to wait to do so until you have confirmation of a settled payment.
No Account/Unable to Locate Account (R03)
This means that the account number or routing number you entered does not match the customer name, or that this is not an existing account. This may be due to a simple typo or miscommunication with the customer.
Suggestion: Contact your customer and confirm the Routing Number, Bank Account Number and the exact name on the bank account. Make the changes and resubmit the payment.
Invalid Account Number (R04)
The account number structure is not valid. The Entry may fail the check digit validation or may contain an incorrect number of digits.
Suggestion: Contact your customer and obtain the correct bank account number. Submit a new payment using the corrected bank account number.
Customer Advises Not Authorized; (R10)
This return response means that the account holder has disputed the transaction as unauthorized and the funds were returned back to the account holder.
Suggestion: First, suspend any recurring payments scheduled with this bank account. This will prevent additional transactions from being returned. Second, contact your customer and resolve any issues that caused the authorization to be revoked. You can ask the customer to debit a different bank account. If you need to debit the same bank account, instruct the customer to call the bank and remove the block on transactions.
Authorization Revoked by Customer(R07)
The Receiver who previously authorized an Entry has revoked authorization with the Originator for this debit Entry.
Suggestion: First, suspend any recurring payments scheduled with this bank account. This will prevent additional transactions from being returned. Second, contact your customer and resolve any issues that caused the authorization to be revoked. You can ask the customer to debit a different bank account. If you need to debit the same bank account, instruct the customer to call the bank and remove the block on transactions.
Customer Advises Unauthorized, Improper, Ineligible, or Part of an Incomplete Transaction (R10)
The RDFI (Receiving depository financial Institution) has been notified by the Receiver that the Entry is unauthorized, improper, ineligible, or part of an incomplete transaction.
Suggestion: Note that the Receiver may request immediate credit from the RDFI for an unauthorized debit (this request must be made within 60 days after the RDFI sends or makes available to the Receiver information pertaining to that debit Entry). There needs to be a new authorization given to debit the account again.
OR Immediately suspend any recurring payment schedules entered for this bank account. This will prevent additional transactions from being returned while you address the issue with your customer. Then contact your customer and resolve any issues that caused the transaction to be disputed or the schedule to be cancelled.
You can ask the customer for a different form of payment or ask to debit a different bank account.
If you need to debit the same bank account, instruct your customer to call the bank and remove the block on transactions.
Corporate Customer Advises Not Authorized (R29)
The RDFI has been notified by the Receiver (non-consumer) that the Originator of a given transaction has not been authorized to debit the Receiver’s account.
Suggestion: Immediately suspend any recurring payment schedules entered for this bank account. This will prevent additional transactions from being returned while you address the issue with your customer. Then contact your customer and resolve any issues that caused the transaction to be disputed or the schedule to be cancelled.
You can ask the customer for a different form of payment, or ask to debit a different bank account.
If you need to debit the same bank account, instruct your customer to call the bank and remove the block on transactions.
Non-Transaction Account (R20)
The ACH Entry destined for a non-transaction account, for example, an account against which transactions are prohibited or limited.
Suggestion: Contact your customer to obtain authorization to charge a different bank account.
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