There are three Return Rate thresholds to monitor when you accept ACH payments: Overall Return Rate, returns for some Not Authorized reason codes, and returns for some Invalid Account reason codes.
These rates are calculated for each month of ACH transactions as follows:
Overall Return Rate: the count of all ACH Returns within a month / the count of all ACH Transactions within a month
If a merchant has 100 ACH transactions and 4 ACH Returns in a month, their Overall Return Rate is 4/100 = 4%
Not Authorized Return Rate: the count of the returns with codes R05, R07, R10, R11, R29, and R51 within a month / the count of all ACH transactions within a month
If a merchant has 100 ACH transactions and 1 R29 ACH Return in a month, their Not Authorized Return Rate is 1/100 = 1%
Invalid Account Return Rate: the count of all returns with codes R02, R03, and R04 within the month / the count of all ACH transactions within the month
If a merchant has 100 ACH transactions, 1 R02 ACH Return, and 2 R03 ACH Returns in a month, their Invalid Account Return Rate is 3/100 = 3%
Red text in ACH Return Details indicates that one or more of your return rates are approaching its threshold.
The thresholds for each Return Rate are:
- Overall Return Rate: turns red at 10%; the threshold is 15%
- Not Authorized Return Rate: turns red at 0.3%; the threshold is 0.5%
- Invalid Account Return Rate: turns red at 2.5%; the threshold is 3%
If you are approaching a threshold, it may be time to review your business' policies and procedures around ACH Payments to bring future return rates down.
Contact our Risk Team for assistance with ACH Return Rates and ACH Payment best practices.