If you process ACH payments, you may eventually come across ACH return code R06. Electronic transfers from one bank to another have become a common practice among businesses in the United States. The Automated Clearing House (ACH) oversees these transactions. If something with the transfer is askew, a three-character return code will appear. This code indicates that the transfer did not go through. The specific code tells the merchant why the payment declined. There are over 80 ACH return codes, all with different reasons for why a payment declined. Return code 06 is one of these reason codes. Read on to learn what return code 06 means and how to resolve it.
What does ACH Return Code R06 Mean?
Return code R06 means the Originating Depository Financial Institution (ODFI) has requested the Receiving Depository Financial Institution (RDFI) to return the ACH payment. If the RDFI agrees to the return, then the ODFI must oblige. The ODFI may be the customer’s (or business’s) bank. It may also be a third-party processor used to generate ACH transactions.
Return code 06 means the electronic transfer was returned after failing a proof of authorization process. Even if authorization was previously granted for the ACH transfer, the issuing bank is revoking it. This could happen for a few reasons:
- The payment is fraudulent
- Someone initiating the transaction failed to address proper authorization verification steps
Regardless of the reasoning, the transaction did not go through. This means the requester did not secure the funds from the customer. The bill remains outstanding and the customer is still responsible for proper payment.
The formal definition of ACH return code 06 is the Originating Depository Financial Institution (ODFI) has requested the Receiving Depository Financial Institution (RDFI) to return the ACH entry. This is on the basis that the payment was erroneous, improper, unauthorized, or fraudulent. Return code R06 absolves the RDFI of legal liability for the wrongful payment. R06 is the proper code the RDFI should use to return the funds and escape liability.
Solutions to Fix R06 Return Code
To resolve return code 06, you as a merchant should contact the ODFI for additional information. Only they can tell you why they asked for a return. You may also contact your payment processor for further information.
As always, remain calm and courteous while addressing ACH return codes with the customer. Any transactional problem can be frustrating for both parties. Because of this, you should uphold stellar customer service to maintain customer loyalty.
You should also suspend any current or scheduled payments to the account in question until you resolve the issue. Failing to suspend any future transactions will result in more returned payments. The expected return time for an R06 ACH return code is typically around sixty calendar days.
ACH payment return codes are in place to protect both customers and merchants. These electronic transfers are set up with various checks and balances to ensure that payments are secure between banks. ACH return codes appear for a variety of reasons, whether that’s human error, fraud, or other issues. It’s important to know and understand these codes to better manage these issues when they arise.