It sounds like the title to a really lame 50′s horror flick. OK, maybe it doesn’t sound quite that good.
As we have already discovered the wonders of processing ACH transactions and we learned what most of the participants do, I wanted to talk about what happens when things don’t go so smoothly.
Like your college-bound teenage kid, many ACH transactions eventually come home to roost, sometimes just for a short time (maybe the Summer) and sometimes when they move in, they really move in.
To my mind, there are really two kinds of Returns – Regular Returns and Extended Returns. OK, there are three kinds of Returns – Regular Returns, Extended Returns and Operator Returns. OK, there are four…just kidding, only three. Today, I want to talk about Regular Returns. When I say Regular Returns, I am referring to the common everyday kinda return that just sort of happens.
For instance, NSF, Account Closed, Stop Payments, stuff like that. Of course the full list is a lot longer than that. For a full list of all Returns, check out pages OR 113 to OR 120 in your 2009 ACH Rules book, you know that pretty pea green book that so-and-so gave you that you have never opened?, that’s the one. If you really don’t have one, check with your Regional Payments Association or visit pubs.nacha.org and get your copy today.
You may be asking, what makes a regular return a Regular Return. Well, there is one truly defining requirement of all Regular Returns that bind them to this category and that is their return time-frame. Check it out:
The Technical:
This applies to all RDFIs: “Except as otherwise provided…, each return entry must be received by the RDFI’s ACH Operator by its deposit deadline for the return entry to be made available to the ODFI no later than the opening of business on the second banking day following the Settlement Date of the original entry….”. This is quoted from page OR 26 of the 2009 ACH Rules book. The “…” represents the really boring parts.
Human Language:
This applies to all RDFIs: The rule of thumb – all returns must be processed within 24 hours, unless otherwise noted.
Note: This is on banking days only, if received on a Friday, the 24 hours is up on the next banking day – Monday, possibly Tuesday.
A Practical Example:
As the RDFI, chances are that you download your files from the ACH Operator or Third Party Receiver every banking day morning at oh-my-goodness AM. Let’s say that one of those transactions is a debit transaction that is destined to post on Tuesday, June 16 and there are not sufficient funds in the account to accommodate it, and you choose to return it (excepting of course, any overdraft protection, courtesy posting and the like).
That return item must be made available to the ODFI by opening of business on Thursday, June 18. How are you going to get it to them? You know that your last file of each banking day is processed at 4:00 PM to your ACH Operator or Third Party Sender.
You could process the return as soon as you realize that it cannot post on Tuesday or you can wait and process the return at any time, as long as it is processed by your 4:00 PM deadline on Wednesday. As long as you make that 4:00 PM deadline, it will process overnight and be made available to the ODFI by opening of business on Thursday morning…the 2nd banking day following the Settlement Date of the Original Entry.
My 24 hour rule of thumb says you would process it by Wednesday morning….accomplishes the same goal and is easier to remember.
As a subset to Regular Returns, there are Dishonored Returns and Contested Dishonored Returns. Notes: 1) you will find specifics on those returns after the details of the Regular Returns on the pages mentioned above and 2) As a refresher on Dishonored and Contested Dishonored Returns, I encourage you to go back and read my earlier post titled Circle of Life.
Stay tuned for Part II.
Check out the origin of “Rule of Thumb“.
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