ACH Reject Codes
The following breakdown will familiarize you with the most common declined codes originating depository financial institutions (ODFIs) and receiving depository financial institutions (RDFIs) encounter.
Discover which Automated Clearing House (ACH) rules can decrease those ACH reject codes and entries. Partner with E-Complish today to abide by those policies.
Common Return Code Reasons
Insufficient funds (R01): This account’s balance of available/reserve cash is insufficient to cover this debit entry’s dollar value.
Account closed (R02): Customer or RDFI closed this formerly active bank account.
No account or inability to locate it (R03): Although the structure of this account number is valid and it passes check digit authentication, the number fails to correspond with the person this record identifies. Or the designated number is not for an open bank account. RDFIs may not use the R03 code to return accounts receivable check (ARC), point-of-purchase (POP), or back-office conversion (BOC) entries without individuals’ names.
Bank account number invalid (R04): The structure of this account number is invalid. Reasons could be an improper digit count or check digit validation failure.
Unauthorized debit from consumer account uses corporate standard entry class (SEC) code (R05): Receiver didn’t authorize a corporate credit or debit (CCD), corporate trade exchange (CTX), or cross-border (CBR) debit into a consumer’s account.
Customer revoked authorization (R07): RDFI’s account holder revoked the approval he or she provided to their ODFI previously. No RDFI may use the R07 code for POP, single internet-authorized (WEB), and telephone-authorized (TEL) entries.
Client advised unauthorized entry, no originator notice, faulty source document, or inaccurate amount (R10): Payer notified the RDFI that he or she didn’t authorize the transaction’s originator (provider or biller) to debit his bank account. Use R10 for consumer accounts, excluding ARC, POP, and represented check (RCK) entries.
Corporate customer advised unauthorized entry (R29): A non-consumer receiver notified the RDFI that he didn’t authorize that transaction.
Ineligible item, no originator notice, fake or unauthorized signature, item alteration, or inaccurate entry amount (R51): Various criteria make RCK entries ineligible.
To raise the ACH Network’s overall quality, certain rules reduce returned entries, account holder disputes, financial costs, and reputational damage while improving customer satisfaction.
Return level administrative inquiries: These investigations provide the National Automated Clearing House Association (NACHA), the ACH rule maker, with introductory evaluations regarding originators’ possibly problematic network activities. Research starts when a company goes above one of two established return rates:
- The 3 percent level applies to denied debit entries involving account data or administrative errors with R02, 3, and 4 codes.
- A 15 percent overall declined rate applies to all debits except for RCK entries for all rejection types.
Some return reasons like insufficient funds seem unavoidable, but excessive denials may indicate troublesome origination practices. Reviews include eight steps without triggering rule enforcement automatically. They enable NACHA to inspect originators’/third-parties’ transaction procedures more closely to determine if poor origination routines are increasing high rejections that need reduction.
Rate of unauthorized returns: A rule decreased the unauthorized debit return threshold for R05, 7, 10, 29, and 51 codes from 1 to 1/2 percent. To maintain that level, originators must obtain proper authorizations for all debits.
Entry reinitiations: ACH rules permit resubmission of returned entries. For every record you resend, the amount, business name, and corporate ID field details must be identical. NACHA prohibits originators from reinitiating certain items outside of limited circumstances. But you may modify other fields just to fix administrative errors or facilitate processing. ODFIs must key in “RETRY PYMT” for each company entry description, identifying resubmissions as meeting reinitiation rule criteria.
Trust E-Complish’s secure and reliable ACH Processor to handle large payment batches rapidly and affordably. Our full NACHA compliance will help you follow all rules and manage any ACH reject codes. You’ll also appreciate lower fees, greater collections, improved cash flow, earlier insufficient fund warnings, faster clearance, and quicker settlement notifications.
Viewing inquiries as intimidating is unnecessary for retailers and ODFIs. If your firm’s overall rejected rate exceeds 15 percent, consider that warning sign convenient. The ACH lets merchants demonstrate their collection activity’s legitimacy. Show that your return and administrative ratios are the lowest possible for your business model with its current payment acceptance method. Prove that complacency, negligence, and rule violations like excessive reinitiations aren’t elevating your level. Proper ACH network usage and transparent corporate practices can justify your financial transactions’ soundness.