ACH offers many advantages over paper checks, including faster notification of acceptance or failure. That said, ACH reject codes still come days after the transaction is initiated — and sometimes incur an ACH reject fee — so it’s important to know how to resolve these rejects and provide the right information to your customers.
To quickly rectify these rejects, it’s vital to familiarize yourself with the most common ACH rejects and how to solve them.
4 Reasons for ACH Rejects
- “R01 Insufficient Funds” means the available balance is not sufficient to cover the amount of the debit entry. After receiving this ACH reject code, there isn’t much you can do other than rerun the transaction. It’s likely the customer will need to transfer money into his account, or use a different payment method, before you try again.
- “R02 Bank account closed” occurs because a customer closed a previously active account. When you encounter this ACH reject code, it’s probably because the customer genuinely forgot to notify you. If a customer closes his account that’s linked to a recurring payment schedule, the next scheduled payment would receive a R02 reject code.
- “R03 No bank account/unable to locate account” can trigger for two reasons. The account number entered does not correspond to the individual identified in the entry, or the account number indicated is not an open account. In short, some combination of the data given (account number and name on account) doesn’t match the bank’s records or a nonexistent account number was entered. Here's how to recharge a rejected R03 transaction in our system.
- A “R29” reject occurs when a bank doesn’t allow a processor to withdraw funds from a particular bank account. As a business, your hands are tied in this instance. The customer’s bank will need the originating ID for the ACH payment to enable the withdrawal.
It’s important to know that some of these ACH rejects can trigger notifications of change (NOCs). For example, if the account number is closed (R02) and the bank says a new account number is available, you will receive a NOC and incur an ACH account number reject fee.
At some point, you’ll encounter an ACH reject fee. Familiarize yourself with these common reject codes so you can quickly resolve the next reject you encounter and deliver the news to your customer with ease.
Ever encounter AVS mismatch?
Do you process ACH transactions and run into rejects often? Which error codes do you tend to see? We'd love to hear from you!