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Automated Clearing House (ACH) payments are a form of bank-to-bank electronic funds transfers only available to United States-based financial institutions. Compared to other payment methods, ACH payments typically incur cheaper fees and process faster. And as a business owner in 2022, it’s imperative that you stay informed about every payment method available to your business. Otherwise, you may unknowingly stunt your business’s revenue by not utilizing the most cost-effective payment method. Below, we examine how your business can make use of ACH payments and manage ACH returns—particularly ACH return code R41.
ACH Direct Deposit
The Automated Clearing House Network enables electronic funds transfers suitable for use in B2C, B2B, and B2G transactions. Additionally, ACH payments are an ideal solution for streamlining payroll through direct deposit. In fact, direct deposit is the preferred payment method for payroll with 96 percent of US workers already receiving their wages this way. With direct deposit, employees can trust that their paychecks will promptly arrive in their bank account every pay period through an electronic funds transfer that requires no extra effort to access the funds.
ACH ENR Entries
While many people associate direct deposit payments with payroll, federal government agencies issue various benefits through direct deposit. Those receiving federal benefits through direct deposit are usually prompted to enroll through Automated Enrollment Entry (ENR). As the enrollment method preferred by federal agencies, ENR expedites enrollment when compared to paper enrollment options. It also reduces errors that may delay enrollment.
Direct deposit enrollment via ENR is executed by a nondollar entry sent through the ACH Network. The Receiving Depository Financial Institution (RDFI) sends the nondollar entry to the Originating Depository Financial Institution (ODFI). In the case of federal benefits, the financial institution used by the beneficiary is the RDFI and the institution used by the federal agency is the ODFI.
What Does ACH Return Code R41 Mean?
The ACH Network returns an ACH payment when it does not meet the standards outlined by the National Automated Clearing House Association (NACHA). An ACH return code accompanies an ACH return. Maintained by NACHA, there are currently over 80 ACH return codes. These standardized codes consist of only three characters, such as “R41,” but those three characters are enough to communicate why an ACH payment failed to meet NACHA’s standards.
ACH return code R41 only generates for ENR entries. Different ACH payment types, like ENR entries, require different format specifications. In the case of ACH return code R41, the format of the ACH payment did not meet the standards necessary for an ENR entry. A rejected ENR entry remains undelivered to the associated federal agency.
Formal definition
The formal definition associated with ACH return code R41 is “Invalid Transaction Code.”
Solutions to Fix R41 Return Code
If you’ve received ACH return code R41 in your business dealings, you should promptly inform the associated government agency of the returned ENR. Upon identifying the underlying issue, the agency may request you correct and resubmit the ENR. Additionally, the agency may advise you to enroll in automated payments through an alternative method.
As a merchant, you are unlikely to receive ACH return code R41, especially if you don’t execute any B2G operations. Additionally, that rare occurrence of an ACH return shouldn’t dissuade you from utilizing ACH payments in your business. Accepting ACH payments from your customers and/or vendors can expedite and even automate your business operations.
