ACH Return Codes Explained: Full List, Meanings, and Fixes

If you send or receive bank payments in the United States, you will eventually see an ACH return code. These short codes look technical, but they simply explain why a bank transfer failed.

Understanding ACH return codes helps businesses avoid lost payments, reduce chargebacks, and fix banking errors quickly. This guide explains what ACH return codes are, the most common ones, and how to resolve them.

What Is an ACH Return Code

An ACH return code is a message from the banking system that tells you why an Automated Clearing House payment could not be completed.

ACH payments include:

• Direct deposit salaries

• Subscription billing

• Online bill payments

• Vendor transfers

• Refund processing

When something goes wrong, the receiving bank sends back a specific return code.

Think of it as a banking error explanation.

Why ACH Payments Get Returned

ACH transfers usually fail for simple reasons:

• Insufficient funds

• Closed bank account

• Incorrect account number

• Unauthorized transaction

• Stop payment request

• Frozen or restricted account

The return code identifies the exact issue.

Most Common ACH Return Codes (Simple Explanation)

R01 — Insufficient Funds

The customer’s account does not have enough money.

Fix: Retry payment after notifying the customer.

R02 — Account Closed

The bank account is no longer active.

Fix: Request new banking details from the customer.

R03 — No Account / Unable to Locate

The account number does not exist.

Fix: Verify routing and account numbers.

R04 — Invalid Account Number

The account format is incorrect.

Fix: Ask the customer to confirm banking information.

R05 — Unauthorized Debit to Consumer Account

The customer claims they did not approve the transaction.

Fix: Stop billing immediately and obtain written authorization.

R07 — Authorization Revoked

The customer previously approved but later canceled authorization.

Fix: Do not attempt further withdrawals without new permission.

R08 — Stop Payment

The customer requested the bank block this transaction.

Fix: Contact the customer before retrying.

R09 — Uncollected Funds

Funds exist but are not yet cleared.

Fix: Retry after a few days.

R10 — Customer Advises Unauthorized

The customer disputes the transaction as fraud.

Fix: Treat as high risk. Do not retry without proof of authorization.

R29 — Corporate Customer Advises Not Authorized

A business account reports the payment was not approved.

Fix: Obtain company authorization before retrying.

ACH Return Time Limits

Return timing matters.

• Insufficient funds returns usually happen within 2 banking days

• Unauthorized claims may be filed for up to 60 days

• Administrative errors are typically returned within 2–3 days

Businesses should monitor failed payments daily to respond quickly.

How Businesses Can Reduce ACH Returns

Smart practices lower return rates significantly.

1. Verify bank details before first charge

Use micro-deposit verification or instant bank validation.

2. Send payment reminders

Customers often forget upcoming debits.

3. Keep signed authorization records

This protects you from unauthorized disputes.

4. Monitor repeat failures

Multiple R01 or R09 returns often signal future payment problems.

Why ACH Return Codes Matter for Compliance

High ACH return rates can cause serious issues:

• Payment processor warnings

• Account monitoring programs

• Higher transaction fees

• Possible account termination

Banks typically expect:

• Unauthorized returns below about 0.5%

• Overall returns below about 15%

Keeping returns low protects your payment operations.

Final Thoughts

ACH return codes are not complicated once you understand their purpose. Each code simply tells you why a bank transfer failed and what to fix next.

For businesses, learning these codes improves cash flow, reduces disputes, and keeps payment systems running smoothly. For customers, it helps identify banking mistakes quickly and avoid service interruptions.

If you regularly handle ACH payments, keeping a small reference list of common return codes can save hours of troubleshooting.