What are ACH Reversal Rules & How Does it Work?

ByMarkl Harries
ACH Reversal Rules-3fb67397

An ACH reversal is a transaction that undoes an earlier ACH transaction. ACH reversals can be initiated by either the originating bank or the receiving bank, and must be approved by both banks before the funds can be returned to the originator.

 

There are two types of ACH reversals:

 

  1. Return: A return is initiated by the receiving bank and is used when there are insufficient funds in the account, the account is closed, or the wrong account number was used.
  2. NOC (Notification of Change): A NOC is initiated by the originator and is used when there are incorrect or missing data elements in the transaction, such as the wrong account number or routing number.

 

To initiate an ACH reversal, the originating bank or receiving bank must contact their ACH Operator and provide the following information:

  • The original ACH transaction identification number
  • The reason for the reversal
  • The effective date of the reversal
  • The dollar amount of the transaction

If the reversal is approved, the ACH Operator will notify the other bank and the funds will be returned to the originator within two to three business days.

 

There are a few things to keep in mind when it comes to ACH reversals:

 

  • Reversals can only be initiated within 60 days of the original transaction.
  • There is a fee for initiating an ACH reversal, which is typically passed on to the originator.
  • Reversals can take up to three business days to process.
  • If you are the originator of a transaction that is being reversed, your account will be debited for the amount of the transaction plus any fees associated with the reversal.

If you have any questions about ACH reversals or need help initiating one, please contact your bank or the ACH Operator for assistance.

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