Bank payments are powered by a technology called Automated Clearing House, or ACH for short. While bank payments are the most convenient way for you to collect your recurring payments, sometimes there will be situations where the payment is declined.

If this happens to you, don’t panic! The most common declines have simple explanations, and easy fixes.

In this blog post, I’ll cover 5 common ACH return codes and let you know how you can fix them! (Plus, stick around for some bonus tips on avoiding ACH returns.)

R01: Insufficient Funds


What it means:

Insufficient funds is one of the most common ACH return codes. It means there was not enough money in your customer’s account to cover the amount of the transaction on the day it was processed.


What you can do:

Our recommendation at Rotessa is, when you see a payment has been returned R01, that you contact your customer before you re-process the payment. Otherwise, you may find payments that are repeatedly declined.


R02: Account Closed


What it means:

This return means that your customer’s account has been closed at their bank, and money cannot be debited from it. You shouldn’t re-submit these transactions, as they will never go through.


What you can do:

To fix an R02 decline, contact your customer to get their new account details. Once you’ve entered their new account information, re-process your transaction.


R03: No Account or Unable to Locate Account


What it means:

An R03 return means that there is a discrepancy between the account information submitted to the ACH network, and the customer’s actual account information.


What you can do:

Another common ACH return, the R03 is quite easily fixed. Check the account information you have on file, with a copy of your customer’s current account information (a void cheque is a great way to find this). Most of the time, it’s a simple case of a number being entered incorrectly. Fix the account numbers, and re-process the transaction!


R04: Invalid Account Numbers


What it means:

The actual format of the account number is not valid.

Unlike the previous return, where the format is valid but the number doesn’t match, this one means the number is formatted incorrectly. For instance, the account number may not have enough numbers.


What you can do:

The fix is the same as an R03 return – fix the incorrect account numbers and re-submit the transaction.


R20: Non-Transaction Account


What it means:

The bank account the debit was sent to cannot be used for ACH payments.


What you can do:

You’ll need to contact your customer and ask for an account that has the ability to be charged via ACH. Don’t forget to confirm with your customer that the new account can be debited with ACH transactions!


Other Return Codes

Those 5 ACH return codes are only a few of the most common codes, but there are less-common return codes you may see. For an exhaustive list of all ACH return codes, you can take a look at this excellent list from QuickBooks.


If you have a payment that is returned, don’t worry! With easy-to-read ACH return codes, you’ll know exactly why a payment was returned, and what to do next.


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