Electronic Check Returns
Sometimes explaining to a customer why their online ACH/EFT payment rejected can be difficult. Especially if the customer claims their account is in good standing. One thing to keep in mind is that an ACH/EFT return, or rejection is reported directly from the customer’s bank. The best course of action is to request that your customer contact their bank and speak to someone in their ACH department, so they can research the reason for return and assist the customer with the best course of corrective action.
How ACH/EFT Returns work
Electronic check returns are received by Invoice Cloud’s processor daily, usually within a few days of the initial transaction. The Processor receives reject information from the payer’s bank nightly. The payer’s bank is responsible for communicating to the Processor whether the payers bank is in good standing and/or has sufficient funds. The most common reasons for funding to be returned are:
- Incorrect Information: The account debited is either invalid, closed, or does not exist.
- Insufficient Funds: The payer’s available balance does not cover the debited amount.
- Payment Stopped: The payer has requested a stop to payments to a specific ACH debit entry.
How long will it take to receive if an ACH Reject occurred?
Commonly, it takes about 2-4 days for an ACH to reject, regardless of the reason. Some smaller banks can take additional time, sometimes more than a week.
When an ACH Reject occurs how / when will you be notified?
ACH processes in the United States always runs overnight and Banks deliver Reject information every night. Electronic check returns are received by Invoice Cloud’s processor daily, usually within a few days of the initial transaction. As soon as Invoice Cloud receives the information, we update our system, biller portal, reports and send out emails to Payers and Billers letting them know an ACH Reject has occurred.
How are systems updated when an ACH Reject occurs?
When an ACH Reject occurs the biller is notified through email (or can be automated through Data Pump). Return/reject information should be posted to the customer’s account balance in your collection system. When Invoice Cloud retrieves the balance for that customer, either via adjustment file or through RTDR, the updated balance will display.
What about return fees?
Invoice Cloud does not charge the payer any fees for a returned payment. You may choose to pass any fees on to the customer that are assessed to you from Invoice Cloud or your Bank. This a common practice that many Invoice Cloud customers follow.
Can ACH Rejects be set to send over Data Pump
Yes. If your integration is not coded to accept ACH returns, please contact Invoice Cloud Client Services, so we may work with your collection system provider.
How much time does a customer have to dispute an ACH/EFT transaction?
Per NACHA guidelines, customers can file a dispute for any ACH/ECP transactions up to two years from the effective transaction date. This can be become difficult to track and manage. Please reach out to Client Services if you need assistance reconciling rejected ACH/EFT payments.