ACH Reject FAQs

  1. Does the merchant get charged for an ACH reject?

Yes for the following reason codes, a $25 reject fee is applied to the amount of the reject.

  • R01 Insufficient funds
  • R02 Account closed
  • R07 Authorization revoked by customer
  • R08 Payment stopped or stop payment on item
  • R09 Uncollected funds
  • R10 Customer advises not authorized
  • R16 Account frozen
  • R23 Credit entry refused by receiver
  • R29 Corporate customer advises not authorized

 

  1. What does ABA mean?

It means routing number. The routing number is always 9 digits in length and is typically the first set of numbers encoded on the bottom of your merchants checks.

 

  1. What does DDA mean?

It means Demand Deposit Account - Bank account number

 

  1. What is an NOC reject?

It is a Notification of Change, are non-monetary amounts, equal to $0.00 and serve as a notice of changes or error with the routing number (ABA), the Checking account, and/or both.

 

  1. What does NACHA mean?

NACHA is the National Automated Clearing House Association.

 

  1. What is a transaction code 22?

A transaction code 22 is a Deposit – Credit return.

 

  1. What is a transaction code 27?

A transaction code 27 is a Fee /funds owed – Debit ACH return.

 

  1. What does it means to place an account on hold?

It means that all the processing will be held and the merchant will not receive any deposits.

 

  1. What does Chargeback mean?

It is a Credit card transaction that is billed back to the merchant after the sale has been settle; initiated by the card issuer on behalf of the cardholder.

 

  1. What do I have to do when an ACH reject is received?

Depending on the reason code, the merchant needs to be contacted to resolve the bank account issue:

 

  • R16 Acct Frozen : a new bank information or a proof that the issue has been solved through a bank letter is needed

 

  • R07 - AUTHORIZATION REVOKED BY CUSTOMER: The merchant has to list us with his/her bank as a pre-authorized debtor in order for their bank to accept debits/credits from us.  A proof that the issue has been solved through a bank letter is needed

 

  • R08 - PAYMENT STOPPED : The merchant needs to contact his/her bank and remove the Stop Payment. A proof that the issue has been solved through a bank letter is needed

 

  • R03 - NO ACCOUNT/UNABLE TO LOCATE ACCOUNT : The merchant must provide a new and valid bank account

 

  • R04 - INVALID ACCOUNT NUMBER: The merchant must provide a new and valid bank account

 

  • R13 - Non-participating DFI: the merchant must provide  a new bank information or a letter from the bank authorizing debit/credits.

 

  • R23 - Payment refused by biller (CIE, CTP, entries): the merchant must provide  a new bank information or a letter from the bank authorizing debit/credits.

 

  • R02 - Bank acct closed: The merchant must provide a new and valid bank account

 

  • R20 - Non-transaction account / “R06 - RETURNED PER ODFIS REQUEST" (Most likely a savings or money market account – these don’t generally accept debits): The merchant must provide a new and valid bank account that accepts debits.

 

  • R29 - Advices not authorized: The merchant has to list us with his/her bank as a pre-authorized debtor in order for their bank to accept debits/credits from us.  A proof that the issue has been solved through a bank letter is needed

 

  • R10 - Customer advises not authorized: The merchant has to list us with his/her bank as a pre-authorized debtor in order for their bank to accept debits/credits from us.  A proof that the issue has been solved through a bank letter is needed

 

  • R45 - INVALID INDIVIDUAL/COMPANY NAME (ENR ONLY): The merchant  will need to provide DDA with the listed business as the DDA account holder in order for bank to accept the debit/credits

 

  • R01 Insufficient funds / R09 - UNCOLLECTED FUNDS: if the merchant is not processing, he/she must have funds available in her/his bank account to cover the amount of the reject so it can be resubmitted to his/her bank account. In the case the merchant is currently processing, the account will either be place on hold or if there is an incoming batch with enough money to cover the reject, it will be resubmitted to the merchant’s bank account.

 

  1. Why it is important to try to resolve the bank account issue?
  • Because the account will be closed if the issue persist for a second time
  • Because the account is some cases will be placed on hold and everything that the merchant process will get held and won’t receive their processed money.
  • Because a fee is applied to each reject

 

  1. Should a merchant be notified of what an ACH reject is at the moment the application gets signed?

Yes, it is very important. The merchant must be informed that if they close a bank account, their bank account get Frozen or any other issue with the bank account occurs, they need to contact us ASAP and let us know so we can take the necessary actions.

 

  1. What happens when a reject for all reason codes other than R01 or R09 (in some cases) is received?

Either the account is placed on hold or the bank account is changed to non-existent one. This means that the merchant will not receive their processed batches.

 

  1. How long it will take for funds held to be settled into a merchant’s bank account after the account has been removed from hold and funds held released when a bank account issue is resolved?

It will take around 48 business hours to 72 business hours.

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