Understanding ACH Returns
Accepting ACH payments is a convenient and reliable way to receive funds—but it's important to understand what happens if a payment is returned, resulting in a chargeback.
What is an ACH Chargeback?
Check out our Explaining ACH returns & chargebacks video!
An ACH return, also known as an ACH chargeback, takes place when a transaction can no longer be successfully processed through the Automated Clearing House network. Unlike credit card payments, ACH transactions do not process in real-time, making it possible for them to be rejected or returned after posting as settled.
Common Reasons for ACH Chargebacks - ACH payments may be returned for several reasons, including:
- Insufficient funds
- Closed bank account
- Invalid account details
- Stop payment request
Interested in learning more? Check out Understanding ACH Return Codes
What Happens When a Chargeback Occurs?
When an ACH return occurs, the shopper's bank overturns the transaction, the money is withdrawn from AndDone and transferred back to the shopper. The bank then notifies AndDone of the chargeback event by issuing a chargeback reason code and providing the relevant data.
Once AndDone receives this notification, we promptly begin the chargeback resolution process:
- Merchant receives a chargeback notification email.
- AndDone will net the full chargeback amount from your upcoming eligible payout, ensuring your account does not become negative.
- There is no automatic withdrawal or debit from your account; recovery is managed through adjustments to future payouts.
This means you do not need to worry about sending the funds back to AndDone. Instead, you can focus on re-engaging your shopper to secure a new, successful payment.
The AndDone Chargeback Process: Step-by-Step
1. ACH Chargeback event occurs.
2. Money Returned to Shopper: The funds are automatically refunded to your shopper’s bank account.
3. Notifications: Receive an email detailing the chargeback event and next steps.
4. Amount Netted from Next Payout: Since you’ve previously received the original payout, AndDone nets the total chargeback amount from your next eligible payout.
5. Your shopper completes New Payment: You will need to reach out to your shopper and have them complete a new payment.
6. Reporting: All chargeback activity is fully documented in your daily settlement report and your daily chargeback report.
Staying ahead of chargebacks starts with understanding their causes and the efficient steps you can take to manage them.
If you need assistance or have additional questions please click here to contact our support team.