R05

What Is ACH Return Code R05?

ACH return codes are used to identify the reason an ACH payment has been returned by the recipient's bank. They make it easier for originating and receiving financial institutions to spot and communicate payment failures.

ACH Return Code R05, also known as "Unauthorized Debit to Consumer Account Using Corporate SEC Code," is a standard code used in Automated Clearing House (ACH) transactions. R05 indicates that a debit entry was initiated to a consumer's account using a corporate standard entry class (SEC) code without proper authorization–meaning the transaction should have been processed as a consumer transaction rather than a corporate one.

How To Address ACH Return Code R05

Nacha prescribes separate rules for handling each return code since each one represents a unique scenario. ODFIs (Originating Depository Financial Institutions) and RDFIs (Receiving Depository Financial Institutions) are responsible for handling ACH return codes according to these rules.

For example, let’s say a consumer's account is debited for a streaming service subscription without their authorization. In this scenario, the consumer's bank has up to 60 days after the payment has settled to return the payment to the company's bank with the ACH return code R05.

Preventing unauthorized debits and ensuring compliance with ACH rules and regulations are crucial for maintaining trust and integrity within the electronic payments system.

If you encounter R05, you can try the following to address it:

• Double check that your transaction has been correctly categorized and authorized based on the appropriate SEC code for the type of transaction you are attempting
• Reach out to your customer and ensure that they have provided you with the correct bank account information
• In some cases, you may be able to file an appeal of the returned transaction with Nacha

What Is An ACH Return Code?

ACH return codes identify the reason an ACH payment was returned by the recipient's bank. They make it easier for originating and receiving financial institutions to spot and communicate payment failures. Each code begins with 'R' followed by a two digit number. ACH return codes are standardized and maintained by NACHA, the governing body for the ACH network.