What are ACH chargebacks and the reasons for them?
This article explains chargebacks and the reasons that they are initiated.
What is a Chargeback?
A chargeback, or an ACH return, occurs when a transaction cannot be processed through the Automated Clearing House. ACH transactions do not process in real-time, so they can be rejected or returned after a transaction has already been settled. When a chargeback is initiated, a bank returns the money in the form of an Electronic Funds Transfer (EFT) to the shopper’s bank.
What Are the Reasons for Chargebacks?
- Insufficient funds
- Closed accounts
- Invalid customer details
- Stop payment orders
- Incorrect amount charged
Chargebacks & AndDone
When the shopper’s bank overturns the transaction, the money is forcibly withdrawn from AndDone and transferred back to the shopper, resulting in a refund. The shopper’s bank notifies AndDone of the chargeback by producing a chargeback reason code and submitting the relevant data. Typically this happens within a span of 2 banking days, but can also occur up to 60 calendar days.
This creates a scenario where AndDone may payout a Settled payment that can be returned as a chargeback. AndDone does not automatically claw back or debit your account to recover these funds. Instead, Instead, we will net the total amount from your upcoming eligible payout. This way you don’t have to stress about sending the funds back to AndDone, you can simply focus on collecting a new successful payment from your shopper.
**Please note: If the shopper makes their payment by any method other than the payment link, those funds will still be disbursed to the Merchant and will need to be refunded to AndDone via a payment link.**
Not all chargeback events are NSF (Insufficient Funds). Please note the reason code listed in the email communication and refer to the description in the article Understanding ACH Return Codes.
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