Over the last several months, Nacha has received a number of questions concerning the appropriate use of Return Reason Codes R08 (Payment Stopped) versus R38 (Stop Payment on Source Document) and R52 (Stop Payment on Item) for the return of Accounts Receivable (ARC) and Re-presented Check (RCK) entries, respectively, when a stop payment order is involved. This operations bulletin is intended to clarify that Return Reason Code R08 (Payment Stopped) can be used to return any entry (including ARCs and RCKs) where a stop payment order has been placed on the ACH entry. There is no limitation within the Nacha Operating Rules (Rules) regarding the use of Return Reason Code R08 for any particular Standard Entry Class (SEC) Code, provided that the return is transmitted within the proper return timeframe. Returns using R08 must be transmitted by the RDFI so that they are made available to the ODFI no later than the opening of business on the second banking day after settlement date.
In situations involving ARC and RCK entries, it is possible that RDFIs may place a stop payment order on their check systems rather than on their ACH systems. In cases where RDFIs have not established a link between their DDA and ACH systems to check for possible stop payment orders, it is possible that an RDFI may fail to act on a stop payment order.
Return Reason Codes R38 and R52 were developed to provide RDFIs with a “safety net,” allowing them to return a debit when a stop pay order was placed on the source document (for ARC entries) or item (for RCK entries) rather than the ACH system. In such cases, where the financial institution’s DDA and ACH systems are not connected, the RDFI may not discover the stop order until the consumer receives his periodic statement. R38 and R52 give the financial institution an extended return time of sixty (60) days from the settlement date to return entries under these specific circumstances.
Financial institutions and their service providers should examine their ACH software to ensure that it allows return reason code R08 to be used for all SEC Codes, including ARC and RCK entries, in a two-day timeframe.
Summary of the usage of each of the return reason codes discussed in this bulletin.
R08 Payment Stopped
This return reason code may be used to return any entry, regardless of SEC Code, when the Receiver of a debit transaction has placed a stop payment order on any specific ACH debit. A stop payment request should be handled in accordance with the provisions of Article Eight (Recall, Stop Payment, Recredit, and Adjustment) of the Nacha Operating Rules. The RDFI should verify the Receiver's intent when a request for stop payment is made to ensure that his intent is not to revoke authorization. A return bearing return reason code R08 must be transmitted by the RDFI so that the return is made available to the ODFI no later than the opening of business on the second banking day after the settlement date of the entry.
R38 Stop Payment on Source Document
This return reason code is specifically for use with ARC Entries and enables the RDFI to return an ARC entry when the consumer notifies the RDFI that a stop payment order had been placed on the source document to which the ARC entry relates, but the stop order was not acted on in the ACH system and returned as R08. This is generally caused by the lack of a link between an RDFI’s DDA and ACH systems. An RDFI using this Return Reason Code must transmit the return entry by its ACH Operator’s deposit deadline for the return entry to be made available to the ODFI no later than the opening of business on the banking day following the sixtieth calendar day following the Settlement Date of the ARC entry to which the source document relates.
R52 Stop Payment on Item
This return reason code enables an RDFI to return RCK Entries when the RDFI determines that a stop payment order has been placed on an item that was represented as an ACH debit, and no link exists between the RDFI’s DDA and ACH systems. An RDFI using this Return Reason Code must transmit the return entry by its ACH Operator’s deposit deadline for the return entry to be made available to the ODFI no later than the opening of business on the banking day following the sixtieth calendar day following the Settlement Date of the RCK entry to which the item relates.
Questions about this ACH Operations Bulletin should be submitted via email@example.com.