A rejected ACH transaction is common for business owners who process hundreds of transfers every day. Understanding why a particular transfer has failed can help business owners take the necessary steps to prevent additional unnecessary fees. It can also ensure that the transaction can be processed more seamlessly the second time around.
Unlike credit card payments and wire transfers, which are instantaneous, ACH payments can take a couple of days to process (Nacha-certified partners are helping with automation to speed up ACH). However, the story does not end after an ACH transfer is complete.
For credit card and wire transfers, the instantaneous transfer helps the receiver and sender identify a failed payment in real-time. For example, if the sender’s credit card is blocked, the payment will fail instantly. So, the receiver can take the necessary steps of asking for payment via some other method.
However, with ACH, there is room for error for up to 60 days. Even after an ACH payment is processed, the sender may receive a payment rejection code later. Such transactions can fail due to multiple reasons. However, the most common reasons why they fail include:
A rejected ACH transaction is different than a pending ACH transfer. Learn how to manage pending ACH transfers.
The banks won’t explicitly tell you why your ACH transfer failed. Instead, the failed transaction will show up as a debit entry on your bank statement with an ACH return code. You will have to understand what this return code means before taking the following steps.
If you face such a code, here’s what you can do:
Do you want to start accepting and sending money through ACH technology but don’t know where to begin? Set up your business with ACH and credit card processing payments with us. Speak to one of our relationship managers here to learn more!
Date originally published: January 07, 2022