Page 26 - GS240501

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maintain compliance with Regulation E.
A chargeback by any other name....

Like with credit card transactions, unauthorized returns
must be kept in check, but the levels are different for
ACH transactions. Though there are two ways for
calculating the return reason codes ratio, in both cases,
the ratio is calculated over a 60 day period, rather than
30 as is done with credit cards.

Unauthorized returns must be maintained below 0.5
percent for the following return reason codes:
• R05 – Unauthorized debit to consumer account
using corporate SEC code
• R07 – Authorization revoked by customer
• R10 – Customer advises not authorized
• R29 – Corporate customer advises not authorized
• R51 – Item Related to RCK (re-presentation check
entry)
Administrative returns must be maintained below 3
percent for the following return reason codes:
• R02 – Account closed
• R03 – No Account/unable to locate account
• R04 – Invalid account number

The overall return rate must be maintained below 15
percent and would apply to all return reason codes.

Though, there are over 20 ACH types, the most common
ACH entry codes are:
• CCD – Commercial credit or debit entry
• CTX – A Corporate Trade Exchange is a commercial
transaction, but requires the originator to include
extra remittance data and in a specific format
• PPD – A Prearranged Payment and Deposit entry
is a consumer credit or debit
• TEL – Telephone-initiated consumer transaction
with authorization given via phone
• WEB – Internet/Mobile initiated consumer
transaction authorization given electronically.

Acknowledging and understanding the differences will
assist you in being able to offer merchants an optimal
ACH solution and at an efficient price.

As founder of Humboldt Merchant Services, co-founder of Eureka
Payments, and a former executive for such payments innovators as
WePay, a division of JPMorgan Chase, Ken Musante has experience in
all aspects of successful ISO building. He currently provides consulting
services and expert witness testimony as founder of Napa Payments
and Consulting, www.napapaymentsandconsulting.com. Contact
him at kenm@napapaymentsandconsulting.com 707-601-7656 or
www.linkedin.com/in/ken-musante-us.

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