ACH Returns

In most instances, the Receiving Depository Financial Institution (RDFI) has 2 business days to issue a return. For certain scenarios, such as unauthorized transactions on consumer accounts, an extended window of up to 60 calendar days may be allowed to initiate a return. Once a return is received by the Originating Depository Financial Institution (ODFI), Treasury Prime is notified and will update the ACH object accordingly.

Example ACH Return Flow

This example outlines a common flow of events around the return of an ACH debit that was originated using the Treasury Prime API.

1. Customer originates an ACH Debit on the Treasury Prime platform.
2. ACH is received by the RDFI, but the corresponding account does not have sufficient funds to cover the transaction.
3. RDFI issues and ACH return with return code RO1 (Insufficient Funds).
4. The ODFI (in this case, the Treasury Prime partner bank) notifies Treasury Prime of the return.
5. Treasury Prime then changes the ACH status to returned, and updates the error field to include the return reason code.
   1. This can also be completed via the Update an ACH endpoint.
6. The ach.update webhook fires to notify the customer that the ACH object has changed.

How to Identify ACH Returns

While hopefully rare, it is important to promptly identify ACH that you have originated through the API to inform the customer that their ACH payment has not been completed.

As mentioned above, when an ACH is returned by the RDFI, the status of the corresponding ACH object will always be updated to returned. Additionally, the error field will be populated with the return code corresponding to the reason for the return.

Once these fields are updated, the ach.update webhook will fire, notifying you of the change. You can then use this webhook to present a notification to the customer that the ACH they originated has not been completed and may require follow-up action.

Returned ACH payments can also be fetched in the API by filtering the /ach list endpoint by status, allowing you to build internal or customer-facing views of returned ACH payments.

Example Request to List Returned ACH Objects

curl -u $API_KEY_ID:$API_KEY_VALUE {% api-endpoint /%}/ach?status=returned

How to Return an ACH

If you have an Originated ACH transfer that needs to be returned, leverage the Update an ACH endpoint to make the return. This feature will need to be enabled for your organization, if it is not enabled please contact our Support Team at [email protected] and include the transaction id associated with the originated ACH, the reason the return is being requested, and any other relevant information about the request. Our team will aid you in the process of submitting the return request to the ODFI, and if approved, the ODFI will submit the return to the RDFI. A successful return will result in an additional transaction being posted to the user's account to reverse the original transaction.

Example Returned ACH

The below example demonstrates an ACH Debit which was returned from the RDFI with a return code of R01 (insufficient funds).

{
    "description": "ACH DEBIT RETURN [ach_11hqstvbf3w5es][ppd][standard] Target",
    "amount": "100.00",
    "service": "standard",
    "counterparty_id": "cp_11gsczk76tqj1p",
    "bank_id": "bank_treasuryprime",
    "account_id": "acct_11hq4m9aee67ye",
    "addenda": [],
    "org_id": "org_1evy4cx2km5",
    "batch_key": null,
    "effective_date": "2022-11-22",
    "updated_at": "2022-11-22T16:00:13Z",
    "status": "returned",
    "id": "ach_11hqstvbf3w5es",
    "error": "R01",
    "sec_code": "ppd",
    "scheduled_settlement": "2022-11-25T16:20:13Z",
    "direction": "debit",
    "created_at": "2022-11-22T15:31:55Z",
    "userdata": null
}

Transactions for Returned ACH Payments

An ACH return will result in the reversal of any funds movement that occurred in response to the initial ACH being created. For ACH debits that usually result in a deposit, a corresponding withdrawal will be made. The opposite occurs for ACH credits, with a deposit being made to counteract the initial withdrawal. These updates to the account balance will ultimately result in the account.update webhook firing.

Scenario 1: Returned ACH Debit Transactions

In the scenario shown below, an ACH debit is created in the amount of $20. This results in a $20 deposit being applied to the originating account, and an immediate hold being placed on those funds.

The RDFI then returns the ACH, at which point a $20 withdrawal is made to reverse the original deposit. Finally, a hold_release is posted to balance the account.

Scenario 2: Returned ACH Credit Transactions

In the scenario shown below, an ACH credit is created in the amount of $20. This results in a $20 withdrawal being made from the originating account.

The RDFI then returns the ACH, at which point a $20 deposit is made to the originating account to reverse the initial withdrawal.

Requesting to Return an Incoming ACH

If you have received an incoming ACH transfer that needs to be returned for reasons such as “Customer Advises Not Authorized, Improper, or Ineligible” (reason code R10), leverage the update Incoming ACH endpoint to make the return. This feature will need to be enabled for your organization, if it is not enabled please contact our Support Team at [email protected] and include the transaction id associated with the incoming ACH, the reason the return is being requested, and any other relevant information about the request. Our team will aid you in the process of submitting the return request to the RDFI, and if approved, the RDFI will submit the return to the ODFI. A successful return will result in an additional transaction being posted to the user's account to reverse the original transaction.

ACH Return Codes

Below is the list of the most commonly encountered ACH return codes.