Common ACH Return Codes
What They Mean & How Merchants Can Resolve Them
When an ACH payment fails, the transaction is returned with a code that explains why. Understanding these ACH return codes is key to managing failed payments, reducing lost revenue, and maintaining compliance.
Below are some of the most common ACH return codes you may encounter as a merchant, along with guidance on how to respond to each.
R01 – Insufficient Funds
Description: The customer’s account does not have enough funds to cover the amount of the transaction.
Why it happens: This is the most common ACH return. It typically occurs when a customer doesn't have enough money in their account at the time of debit.
How to resolve:
• Wait a few days and retry the transaction once.
• Consider notifying the customer so they can ensure funds are available.
• If it’s a recurring issue, discuss alternative payment dates with the customer.
R02 – Account Closed
Description: The account used for the transaction has been closed by the customer or the bank.
Why it happens: The customer may have changed banks and didn’t update their payment details.
How to resolve:
• Reach out to the customer and request updated bank account information.
• Do not retry the same transaction on the closed account.
R03 – No Account/Unable to Locate Account
Description: The bank account number provided does not match any existing account.
Why it happens: This usually points to an error in data entry—either the routing number or account number is incorrect.
How to resolve:
• Confirm bank details with the customer.
• Update the information and initiate a new transaction.
• Use bank account validation tools to catch errors upfront in the future.
R04 – Invalid Account Number
Description: The account number is not valid at the customer’s bank.
Why it happens: Similar to R03, this code usually indicates a typo or formatting error in the account number.
How to resolve:
• Review and correct the bank account details.
• Ask the customer to verify their information and resubmit with valid data.
R07 – Authorization Revoked by Customer
Description: The customer has revoked authorization for you to debit their account.
Why it happens: This is a serious return code. It means the customer has contacted their bank to cancel authorization after previously allowing it.
How to resolve:
• Do not attempt to reprocess this payment.
• Contact the customer to resolve the issue and request a new authorization, preferably in writing.
• Maintain proper authorization records to protect against future disputes.
R08 – Payment Stopped
Description: The customer has requested their bank to stop this specific payment.
Why it happens: This can occur due to a disagreement, misunderstanding, or change in the customer's intent to pay.
How to resolve:
• Contact the customer to understand why they stopped the payment.
• Resolve any disputes and obtain a new authorization before retrying.
R09 – Uncollected Funds
Description: The customer’s account has enough money overall, but those funds are not yet available for withdrawal.
Why it happens: This may be due to pending deposits or holds placed on the account.
How to resolve:
• Wait a couple of days and attempt the transaction again.
• Notify the customer to ensure funds are fully available before retrying.
R10 – Customer Advises Not Authorized
Description: The customer claims they never authorized the payment.
Why it happens: This may be due to fraud, identity theft, or a legitimate misunderstanding.
How to resolve:
• Immediately stop any future debits on the account.
• Contact the customer and ask for clarification.
• If appropriate, request a signed authorization form to continue billing.
• This return may trigger NACHA rules related to unauthorized returns. If this occurs frequently, your business could face compliance reviews.
R29 – Corporate Customer Advises Not Authorized
Description: A business account holder reports that your company is not authorized to debit their account.
Why it happens: This often occurs with B2B transactions where proper authorization was not granted or the wrong SEC code was used.
How to resolve:
• Obtain proper authorization (usually via written ACH agreement).
• Ensure you're using the correct Standard Entry Class (SEC) code for business transactions (e.g., CCD for corporate payments).
• Reach out to the corporate client to correct the authorization gap.
How to Handle ACH Returns Effectively
ACH returns don’t have to disrupt your business. Here are a few best practices to help manage and reduce return rates:
• Use account validation tools before initiating transactions
• Always obtain clear and signed customer authorization
• Monitor return activity in your payment dashboard
• Set up alerts for repeat offenders or high-risk codes
• Partner with a payment processor that offers built-in fraud screening, automated retries (where allowed), and return code tracking
Reduce Risk. Recover Revenue.
ACH returns are part of doing business, but understanding the return codes can help you act faster, resolve issues proactively, and protect your bottom line. At Paybotic Financial, we give merchants the tools and insights needed to stay ahead of failed payments—so you can focus on growth, not guesswork.
Want help managing ACH returns?
Let’s talk about how our platform makes it easier to process, track, and resolve ACH payments with confidence.