Some times ACH payments fail. There usually only a small number or reason for the ACH payment failure.
There are several common reasons why ACH payments might fail. Here's a list of the common reasons that may cause ACH payment failure:
Administrative Errors
- Incorrect account information: A common cause of ACH rejections is incorrect account or routing numbers. If either number is inaccurate, the transaction will fail.
- Closed or nonexistent accounts: If the destination account has been closed or never existed, the ACH transaction will be rejected, usually with codes like R02 or R03.
- Account type mismatch: Certain ACH transactions require a specific type of account, such as a business or savings account. A mismatch here can prevent the transfer from going through.
Financial Issues
- Insufficient funds: An ACH rejection may occur simply due to insufficient funds in the debited account, leading to an R01 rejection code.
- Uncollected funds: Sometimes, funds in an account are present but not yet cleared, resulting in an R09 code when the transaction is attempted.
- Stop payment orders: Account holders can issue stop payment orders on certain transactions. If such an order exists, the ACH debit will be rejected.
Timing and Processing Constraints
- Stale or expired entries: ACH transactions have a limited processing period. Submissions outside this timeframe may be rejected.
- Exceeding transaction limits: Accounts often have limits on the amounts they can transfer. In 2022, Nacha raised the cap on same-day ACH payments to $1 million per transaction. Transfers that exceed this or other specified limits will be rejected.
- Origination issues: At times, the issue may lie with the Originating Depository Financial Institution (ODFI). If the ODFI requests a return, the transaction will not proceed.