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An Automated Clearing House (ACH) payment can be returned for many different reasons. Whatever the reason may be, the party who initiated the transaction will receive a return code, such as ACH return code R29. By rectifying the underlying issue, the ACH payment can be processed. That said, this post explains the underlying issue behind ACH return code R29, allowing you to troubleshoot the rejected transaction.
To initiate an ACH transaction, the Originating Depository Financial Institution (ODFI) first submits the banking information of both parties. This banking information is transmitted across the ACH Network. The National Automated Clearing House Association (NACHA) governs the ACH Network. In doing so, NACHA checks these transactions for accuracy, rejecting transactions that seem inaccurate. An ACH return code generates for each and every rejected transaction. This code communicates what inaccuracy triggered the ACH return. Currently, there are over 80 ACH return codes communicating over 80 inaccuracies.
When an ACH return code generates, the Receiving Depository Financial Institution (RDFI) receives the ACH return code. This is not the bank that initiated the transaction. Rather, the RDFI finalizes the ACH transaction process by debiting or crediting their member’s account with the amount indicated by the ODFI. When an RDFI receives a return code, it notifies the ODFI of the event. It’s then the ODFI’s responsibility to notify the originator, who is the person who initiated the transaction request. It would be at this point that you’d receive ACH return code R29.
What Does ACH Return Code R29 Mean?
If you receive ACH return code R29, it means the account holder notified the RDFI that the originator of the transaction is not authorized to debit their account.
Formal definition
The formal definition of ACH return code R29 is as follows: “Corporate customer advises not authorized.”
In short, your customer has told their bank that you’re not authorized to debit money from their account. Unfortunately, this is not an easy ACH return code to solve. If a customer claims the transaction wasn’t authorized, proof of authorization may help. However, such situations can turn into legal hassles in small claims court.
Solutions to Fix R29 Return Code
If you receive ACH return code R29, immediately stop any recurring payments from that customer’s bank account. Doing so prevents more returned transactions while you try to resolve the first return. The next step is to speak with your customer about what caused them to trigger this dispute or cancellation. Alternatively, you may simply ask your customer for another form of payment.
Unfortunately, the ACH Network doesn’t provide dispute resolution services. You need to negotiate the matter yourself. If the customer insists the transaction was unauthorized, but you have proof of authorization, you might consider seeking legal counsel.
Don’t let the tricky ACH return code R29 deter you from accepting ACH payments for the goods and services you provide. While returns can be frustrating, most ACH payments go through without a hitch.
