What is an ACH return file?

ACH Return Files: Understanding Returned Transactions

ACH return files are crucial components in the ACH payment system, providing detailed information about transactions that were unable to be fulfilled. These files facilitate the reconciliation of returned transactions with the original ACH entries, enabling businesses and financial institutions to identify and resolve issues related to failed transactions.

Content of ACH Return Files

ACH return files contain comprehensive information about the original transaction, including the reason for its return. The return code, typically starting with ‘R’, indicates the specific reason for the return. This information helps businesses understand the cause of the failed transaction and take appropriate action.

Format of ACH Return Files

ACH return files adhere to a specific format, often based on the NACHA (National Automated Clearing House Association) format. The file structure includes header records, company/batch header records, and entry detail records. Each record type contains specific information related to the return or notification of change (NOC) entry.

Record Types in ACH Return Files

ACH return files consist of different record types, each serving a specific purpose:

• File Header Record (Type 1)Provides information about the file, including the file creation date and time, file ID, and originating bank routing number.
• Company/Batch Header Record (Type 5)Contains information about the company or batch associated with the return, including the company name, batch number, and effective entry date.
• Entry Detail Record (Type 6)Includes detailed information about the returned transaction, such as the transaction code, receiving DFI identification, receiver’s account number, amount, and individual/receiving company name.

Field Information in ACH Return Files

ACH return files contain various fields that provide details about the transaction. These fields include:

• Transaction CodeIndicates the type of transaction (e.g., credit or debit) and the account type (e.g., checking or savings).
• Receiving DFI IdentificationIdentifies the receiving financial institution.
• Receiver’s Account NumberSpecifies the account number of the recipient.
• AmountIndicates the amount of the returned transaction.
• Individual/Receiving Company NameProvides the name of the individual or company associated with the receiving account.

Purpose of ACH Return Files

ACH return files serve several important purposes:

• Transaction ReconciliationThey enable businesses and financial institutions to reconcile returned transactions with the original ACH entries, ensuring accuracy in accounting records.
• Error IdentificationReturn files help identify the specific reason for a transaction’s return, allowing businesses to address the underlying issue and prevent future failures.
• Fraud DetectionBy analyzing return files, businesses can detect potential fraudulent activities, such as unauthorized withdrawals or account takeovers.

Conclusion

ACH return files are essential tools for managing ACH transactions. They provide detailed information about returned transactions, facilitating reconciliation, error identification, and fraud detection. Understanding the content, format, record types, and field information in ACH return files is crucial for businesses and financial institutions to effectively manage their ACH payments and resolve any issues related to failed transactions.

References

• Treasury Software: Returns – Receiving and Working with ACH Return Files from your Bank
• Goldman Sachs Developer: ACH Returns & NOCs File (GS-adapted NACHA format)
• Nacha: ACH File Overview

FAQs

What is an ACH return file?

An ACH return file is a document that provides detailed information about ACH transactions that were unable to be fulfilled. It includes the reason for the return, as well as information about the original transaction.

What information is included in an ACH return file?

ACH return files typically include the following information:
– Return code
– Original transaction date
– Original transaction amount
– Receiving financial institution
– Receiver’s account number
– Reason for return

What is the purpose of an ACH return file?

ACH return files serve several purposes, including:
– Reconciling returned transactions with original ACH entries
– Identifying the reason for a transaction’s return
– Detecting potential fraudulent activities

How can I obtain an ACH return file?

ACH return files are typically provided by the financial institution that processed the original transaction. Businesses can request a return file if they have received a notification that a transaction has been returned.

What should I do if I receive an ACH return file?

If you receive an ACH return file, you should review the file to determine the reason for the return. You may need to take corrective action, such as updating the recipient’s account information or resolving any outstanding issues with the receiving financial institution.

How can I prevent ACH returns?

There are several steps businesses can take to prevent ACH returns, including:
– Verifying the accuracy of recipient information before submitting transactions
– Ensuring that the recipient’s account is active and in good standing
– Monitoring ACH transaction activity for any suspicious or unusual patterns

What is the difference between an ACH return file and an ACH notification of change (NOC) file?

ACH return files contain information about transactions that were unable to be fulfilled, while ACH NOC files contain information about changes to ACH transactions, such as a change in the recipient’s account number or the effective date of the transaction.

Where can I find more information about ACH return files?

More information about ACH return files can be found on the websites of the National Automated Clearing House Association (NACHA) and your financial institution.