ACH payments are an excellent way to collect recurring payments like subscription fees, tuition, and rent. If your business model is built on recurring charges or on having customers settle a monthly bill, then ACH is the way to go. However, there will be times when you need to cancel a payment or several payments, and perhaps even terminate an agreement you’ve made with a client or customer. So then, how exactly do you cancel ACH payment agreements? Is it the same process as requesting a stop ACH payment? Can ACH payments be fixed or reversed if there was a mistake in the amount?

When do you need to stop an ACH payment?

How to stop an ACH payment

If one of your clients or customers has notified you that they want to cancel a payment or terminate your agreement – either verbally or in writing – you need to honor that request and cancel the ACH payment. Verbal notification could include a phone call or an in-person conversation. Written notification can include a written letter or an email.

Additionally, there may be times when you need to reverse an ACH payment. If the wrong about was debited from the paying account, if the money was taken from the wrong account or wrong person, or if for some reason you have submitted duplicate ACH requests, you will need to reverse an ACH payment, which is different than stopping an upcoming ACH payment.

There may also be times when fraud is involved, such as when one of your clients or customers is using someone else’s bank account to make payments. If the account owner notifies you of this financial malfeasance, you have to cancel the agreement and stop the ACH payments moving forward.

How to stop an ACH payment

If you encounter any of the aforementioned reasons how do you go about reversing an ACH payment? First, you must consider that NACHA, the organization that oversees the ACH network, only allows an ACH reversal for three reasons; the wrong amount, wrong account, or duplicate transactions occurred.

It’s also important to note that, technically speaking, the party who initiates the transaction must initiate the reversal, within 5 days of the event. In most cases, that actually puts the client or customer in control of getting their money back. However, merchants are allowed to initiate an ACH reversal and if any of these mistakes came to your attention before the client or customer noticed them, it would be courteous to be proactive. Note that incorrect amounts and duplicate transactions are easier to catch, while the wrong account being debited is something you would likely not know about until the customer notifies you.

There are a few ways that a customer can cancel an ACH payment. Customers can contact their bank and request a stop payment. Usually, banks charge their customers for a stop payment, often between $15 and $35. Stop orders usually need to be requested at least three business days before a transaction is set to occur. If the customer wants the stop order to be permanent, they will often need to notify their bank in writing within 14 days.

However, it’s often best for the customer to just contact you directly and request the ACH payment to be canceled. In some cases, they may want to cancel their contract with you, entirely. In other cases, they may just want to temporarily suspend a single payment because they don’t have the money to cover it this month. Either way, you need to honor the request and cancel the payment, per federal law.

Note, however, that a customer or client cannot cancel an ACH payment to eliminate debt. If you sell a good or service and set up a payment plan to cover it, you are still entitled to collect your owed money –you just can’t debit a bank account without permission. There are rules and regulations around collecting debts and/or bringing in a collections agency, so it’s good to consult legal counsel.

It’s also good to keep in mind that if the customer is actually settling their periodic tab with you with their bank’s bill pay system, they’ll need to contact the bank to discontinue future payments, not you because you’re not the one debiting their account.

If you use a third-party payment processor (TPPP) they will likely offer convenient ways of initiating the process of canceling an ACH payment or requesting an ACH reversal.

How to cancel an ACH agreement

As mentioned, if a customer or client gives you verbal or written notification that they want to cancel an ACH transfer one time or cancel their contract with you, this request must be honored, per federal regulations. It’s best practice to have some kind of form that they can fill out so you can capture the request in writing. Make sure that this form includes a reason for canceling the agreement. This will not only be part of the paper trail in case any disagreements arise, but it can also help you pinpoint and eliminate reasons for customer churn. In most states, it is okay to talk with the customer and attempt to keep their business before canceling the agreement. However, once the customer has given you their final request for cancellation, you must comply with their request.

Sometimes a customer or client will want you to start debiting a different account. You should also have a form they can use to request a change in account and routing numbers. If you are using a TPPP to process your ACH payments, it will be much easier to facilitate a change in banking information, otherwise, you may need to submit that information yourself to the banks involved – both the old bank and the new bank.

One common example of needing to change account information is not with clients and customers, but employees. You may have an employee that wants their paycheck deposited into a different account, for whatever reason. Again, a third party (in this case, a payroll company) can make this process more streamlined, and your HR department should be equipped with the right forms for making this type of change.

With all ACH transactions, but especially the irregular ones, you should be proactive and notify whatever party is appropriate to notify. A TPPP makes this easier with verification systems in place to eliminate or at least flag suspicious transactions. Additionally, with any ACH fraud perpetrated against your own business account, you need to be especially proactive. This is because consumer protection laws do not apply to business accounts, and if you don’t take action within 60 days you may be responsible for shouldering the loss yourself. If you have any vendors or suppliers who are granted permission to use an ACH debit against your account, make sure to constantly monitor your statements for red flags.


In summary, canceling an ACH payment is really the client’s responsibility, but it is also their right. At the same time, canceling an ACH payment does not eliminate debt, and you are entitled to collect what’s owed to you, legally.

When it comes to recurring payments such as memberships, rent, tuition, and period bill pay, canceling an ACH payment or an agreement is reliant on communication.

A TPPP like Rotessa can streamline the process and take away the legwork behind reversals and cancellations. Learn more about Rotessa and check out why over 2,000 businesses are using our services to streamline their payment process!

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