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To ensure your business’s Automated Clearing House (ACH) payment process operates successfully, it’s critical to understand return codes for ACH payments. And such understanding includes troubleshooting a returned ACH payment. In particular, this post explains how to troubleshoot ACH return code R23. This way, ACH return code R23 won’t create a snag in your business’s cash flow.
Under the National Automated Clearing House Association (NACHA) guidelines, there are actually 80 different ACH return codes. While it’s unlikely you’ll memorize each ACH return code, it’s a good idea to at least become acquainted with some of the more frequently seen error messages, one of which is ACH return code R23.
The Automated Clearing House network makes it possible for businesses in the United States to transfer money electronically between financial institutions. In terms of ACH transactions, the Originating Depository Financial Institution (ODFI) initiates the transaction. Most banks have received ODFI endorsement to perform ACH money transactions. Payment processors and payment gateways may also take on this role.
The Receiving Depository Financial Institution (RDFI) receives a debit (charge) or credit (refund) to complete the ACH transaction. Again, banks and third-party payers must be RDFIs to facilitate customer payments. When, for whatever reason, the ODFI may not send or receive money to or from the RDFI, an ACH return code generates. This code indicates what caused the payment reversal.
On top of “ACH,” knowing what “ODFI” and “RDFI” stand for is essential to not only understanding ACH transactions but also knowing how to troubleshoot failed ACH transactions.
What Does ACH Return Code R23 Mean?
Essentially, ACH return code R23 means that the receiver (RDFI) returned a credit (refund) for an ACH transaction.
As defined by NACHA guidelines, ACH return code R23 means “credit entry refused by receiver.” Typically, such refusal occurs when the credit entry amount is in question. The reason the RDFI refused the credit entry may be one of the following scenarios:
- The minimum amount required by the receiver was not paid.
- The exact amount of the credit was not received.
- The receiver will not accept the transaction, as the account is currently subject to litigation.
- Accepting the payment results in an overpayment of the account.
- The receiver does not recognize the originator.
- The receiver did not authorize credit entry for the account.
Solutions to Fix R23 Return Code
Return codes shouldn’t deter you from accepting ACH payments at your business, as they’re generally easy to fix. To fix an ACH R23 return code, contact the vendor about processing. It helps to have the information from a voided check if asked for ePayment details. Because an R23 return code can result for one of the various reasons, it’s important to discuss the matter with the vendor or recipient to ensure the correction is made accurately and on time.