When an ACH payment is captured, the authorization gets sent to the bank to authorize the deduction of the funds. Canopy makes it easier to see when an ACH return happens on your account. You can see the status of Returned within the Refunds table.
Canopy Tip: To ensure that you're receiving notifications for ACH returns, you'll need to enable your notifications within your account settings.
You can find this under Settings > Notifications > Billing, and enable notification for "An ACH payment for an assigned client is returned".
Payment Return Codes
Below are the most common ACH return codes followed by a description. Detailed resolution steps for specific codes such as R03 (No Account/Unable to Locate Account) and R04 (Invalid Account Number) are further explained below to assist in resolving these issues effectively.
Detailed Explanations for R03 and R04
What Does ACH Return Code R03 Mean? ACH return code R03 - No Account/Unable to Locate Account indicates that the provided account information does not correspond to any existing account at the receiving bank.
Causes of R03:
Typographical errors in the account or routing number.
Incorrect account details provided by the customer.
Mismatch between the account details and the account holder's name. How to Resolve R03 Errors:
Ask the client to verify their bank account and routing numbers against their check or bank statement.
Ensure the account holder's name matches the name provided in the payment details.
If needed, the client should contact their bank to confirm their account information and authorize the transfer.
Correct the information as needed and attempt to resubmit the payment.
What Does ACH Return Code R04 Mean?
ACH return code R04 - Invalid Account Number means that the bank account or routing number provided is not valid. This often happens when the details entered:
Have an incorrect number of digits.
Fail to pass the bank’s check-digit validation.
How to Resolve R04 Errors:
Verify the bank routing number against the official bank information.
Confirm the bank account number matches the details found on the customer’s check or bank statement.
Carefully re-enter the corrected account and routing numbers and resubmit the payment.
Important Note: When an ACH is returned, there will be a $7.50 fee associated with it. That returned amount and fee are withheld from your next payout for the return Canopy also applies funds from future transactions to offset any negative balances caused by returned ACH payments before releasing further payouts.
Return Code: | Retry? | Reason: | What it means: |
R01 | YES | Insufficient Funds | Retry up to 2x within 30 days of original authorization. |
R02 | NO | Account Closed | Account no longer exists. New validated transaction required. |
R03 | NO | No Account / Unable to Locate Account | Account info does not match any account. Do not retry. |
R04 | NO | Invalid Account Number | Account number structure incorrect. Obtain correct number from customer. |
R05 | NO | Unauthorized debit to consumer account | Suspend recurring payments. Resolve with customer before any future attempt. |
R07 | NO | Authorization revoked by customer | Customer revoked authorization. Customer must remove bank block before any future attempt. |
R08 | NO | Payment stopped | Resolve with customer and obtain new authorization before retrying. |
R09 | YES | Uncollected funds | Retry up to 2x within 30 days of original authorization. |
R10 | NO | Customer advises not authorized | Customer must remove bank block before any future attempt. |
R11 | YES | Not in accordance with authorization terms | Resolve discrepancy with customer, obtain updated authorization. Retry within 60 days of settlement. |
R12 | YES | Branch sold to another DFI | Check for Adyen auto-update. Obtain new account details if needed, then retry. |
R13 | YES | Invalid ACH routing number | Obtain correct routing number from customer, then retry. |
R16 | NO | Account Frozen | Potential fraud signal. Customer must provide alternative payment method. |
R20 | NO | Non-Transaction Account | Account cannot be used for ACH debits. Obtain ACH-enabled account. |
R29 | NO | Corporate customer not authorized | Add Adyen ACH Company ID 8263863381 to business bank allowlist before retrying. |
Notifications explaining the reasons for returned ACH payments are promptly sent to both the practitioner and the client. These notifications include details about issues like insufficient funds or mismatched account information, ensuring transparency and enabling quick resolution. Specific resolution steps for resolving common codes like R03 (No Account/Unable to Locate Account) and R04 (Invalid Account Number) are now available to streamline the resolution process.
Chargebacks
Tips to Prevent Chargebacks
Make sure you are working with trustworthy clients.
Clear Terms and Conditions.
Authorized Signed Document(s) that they have agreed to the terms/conditions, services, and payment agreement.
Valid Communications with your Client.
Make sure to be as clear as you can be on your invoices for what is being charged.
Handling a Dispute
Important Note: When a payment is disputed, there will be a $7.50 fee associated with it. Declined payments, on the other hand, only incur a small transaction fee of $0.20–$0.30 depending on your processing rates, highlighting the fee difference between disputes and declined transactions.
Payments with a chargeback appear with a "Disputed" status in the Canopy payment receipts table.
A declined payment is one where the transaction fails but the client has not contested it, whereas a disputed payment implies a client has raised concerns about the charge, necessitating further investigation and incurring a $7.50 fee.
You will receive an email from Canopy notifying you of the chargeback with a list of the documentation needed to dispute the chargeback. It is important that you respond promptly due to each card type having different timelines of how much time there is to defend the dispute.
To learn more about Chargebacks and Best Practices for handling disputes, check out our article here!
Summary of Key Points
All returned ACH payments incur a $7.50 fee.
Notifications are sent to both the practitioner and the client in case of returns or declines, explaining the reasons clearly.
Declined card payments incur only a transaction fee ($0.20–$0.30), whereas disputes result in a $7.50 fee.
Funds from future transactions are used to cover negative balances caused by failed payments.