ACH Chargebacks
An ACH chargeback, or ACH return, is a dispute resolution mechanism used by financial institutions that allows an account holder to request a refund for a transaction made via ACH. Financial institutions will also leverage chargebacks when an error arises with a transaction and it cannot be processed appropriately. As a result, ACH chargebacks typically fall under one of two categories:
Transactions rejected by your customer’s bank, and
Transactions disputed by your customer
Transactions rejected by your customer’s bank
Transactions rejected by your customer’s bank typically stem from errors or issues with the transaction. The most common causes are:
The customer has insufficient funds in their bank account
The bank account information is incorrect
The customer has not approved ACH debits from their bank account
These chargebacks typically occur within 48 hours of the transaction and will cause the transaction to move from Processing to Failed in your admin dashboard. As a result, you will not receive a payout until the customer makes a payment that clears successfully.
This is the most common type of chargeback that occurs on our platform.
Transactions disputed by your customer
Customer-initiated disputes will also lead to chargebacks, and can sometimes occur up to 60 days after the transaction date, depending on the type of ACH and bank policy. The most common reasons a customer will dispute an ACH transaction are:
The transaction was unauthorized
There was an error, such as a duplicate transaction or incorrect amount
Non-receipt of goods or services
To reduce the risk of this type of chargeback, it is important to clearly communicate the payment process to your customers, as well as the refund and cancellation policies. Offering timely and responsive customer support to address any billing questions is also essential. Your Alternative Payments customer success rep is always available to help address any customer inquiries about a payment.
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