As you conduct transactions, you may occasionally encounter terms like “ACH returns” and “card chargebacks.” Here’s what you need to know about each, including the key roles involved, return windows, and how they might impact your experience.
returns occur when an electronic payment, such as a direct bank transfer or direct debit, cannot be completed successfully. Common reasons include:
Insufficient Funds: The determines there are not enough funds in the recipient’s account.
Account Closed: The RDFI identifies that the recipient’s account is no longer active.
Incorrect Account Information: The RDFI cannot locate the account due to incorrect account or routing numbers provided by the .
Authorization Revoked: The account holder notifies the RDFI that they have canceled permission for the transaction.
When an ACH return happens, the RDFI sends the return information to the ODFI, which reverses the transaction and returns the funds to the party that was debited.
Card chargebacks occur when a cardholder disputes a transaction made on their credit or debit card. Common reasons include:
Unauthorized Transactions: The issuing bank verifies the cardholder did not approve the purchase.
Goods or Services Not Received: The cardholder informs the issuing bank that the product or service was never delivered or provided.
Duplicate Charges: The issuing bank confirms the cardholder was charged multiple times for a single transaction.
Fraud: The issuing bank suspects the transaction may be fraudulent based on the cardholder’s dispute.
During a chargeback, the issuing bank temporarily or permanently returns the transaction amount to the cardholder. The merchant’s acquiring bank is informed, and the merchant may dispute the chargeback by providing evidence of the transaction’s validity.
Acquiring Bank: The financial institution that processes credit and debit card transactions on behalf of the merchant, communicating with the issuing bank during the chargeback process.
Issuing Bank: Issues the credit or debit card to the cardholder, processes disputes, and manages communications between the cardholder, acquiring bank, and merchant.
Visa: Most chargebacks must be initiated within **120 calendar days **from the transaction processing date. In some cases, the timeframe may be 75 days depending on the reason code and transaction type.
Mastercard: Typically allows up to 120 calendar days from the transaction date, though some chargebacks may need to be filed within 45 or 60 days, depending on the reason code.
ACH returns involve bank account transactions, facilitated by ODFIs and RDFIs
Chargebacks involve credit/debit card transactions, managed primarily by issuing and acquiring banks.
ACH returns can occasionally result from disputes or suspected fraudulent activities (Unauthorized Returns), but most commonly arise from administrative issues such as insufficient funds or incorrect account details. Chargebacks, on the other hand, frequently involve disputes or fraud allegations.
Understanding these terms, timelines, thresholds, and roles helps you manage your transactions more effectively. If you have questions about ACH returns or card chargebacks, please reach out to [email protected] for support.