Managing Failed Payouts

There are several reasons why a Funding Transfer can fail, and a payout can get returned to you. Settlement payouts usually get returned because the wrong banking information gets submitted.

When a Settlement payout fails, and a Funding Transfer gets returned to you:

  • The Funding Transfer to the merchant gets marked as FAILED and updated to include an ACH return code in messages .
  • If the payment was a debit, the return of the Funding Transfer may indicate a scenario where suspicious behavior is involved.

You’ll likely need to reach out to your user to confirm or update bank account information.

Here is the response on the /transfers endpoint when a Funding Transfer fails and gets returned. Funding Transfers get processed on the ACH rails and behave similarly to eChecks.

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{
"id" : "TRxxxxxx",
"amount" : 500,
"tags" : { },
"state" : "FAILED",
"trace_id" : "FNXxxxxxx",
"currency" : "USD",
"application" : "APxxxxxx",
"source" : null,
"destination" : "PIxxxxx",
"ready\_to\_settle_at" : null,
"fee" : 0,
"statement_descriptor" : null,
"type" : "CREDIT",
"messages" : \[ "ReasonCode: R03", "ReasonDescription: No Account/Unable to Locate Account", "Declined because there is a record in FAILED_FUNDS for 'FNXxxxxxxx' transfer" \],
"raw" : {
"Return Date" : "xx/xx/2019",
"Original Date" : "xx/xx/2019",
"Attempted Funds Transfer Date" : "xx/xx/2019",
"Merchant Name" : "xxx xxxx xxxx xxx",
"Sub Merchant Business Name" : "xxx xxx xxx",
"Funding Sub Merchant ID" : "0xxxxxx",
"Funds Transfer Request ID" : "FNXxxxxx",
"Vantiv Payment ID" : "xxxxx",
"Txn Type" : "FISC",
"Funds Transfer Amount" : 500.00,
"Reason Code" : "R03",
"Reason Message" : "No Account/Unable to Locate Account",
"Routing Number" : "xxxxx",
"Account Number" : "XXxxxxx",
"Account Name" : "xxx xxx xxx"
},
"created_at" : "xxxx",
"updated_at" : "xxxx",
"idempotency_id" : null,
"merchant_identity" : "IDxxxxx",
"subtype" : "SETTLEMENT_MERCHANT",
"_links" : { 

}

Resolving Funding Instruction Failures

When a Settlement payout fails, the Funding Transfer gets marked as FAILED and updated to include an ACH return code in messages.

This ACH return code indicates what steps you need to take to resolve the failed payout.

Code Failure Message Description Next Steps
R01 Insufficient Funds The card doesn't have enough funds to cover the transaction. Reach out to your user and confirm the bank account information entered is correct.
R02 Account Closed A previously active account has been closed by an action of the customer or the RDFI. Contact your user for another form of payment or a different bank account.

If you haven't shipped the goods or provided the services covered by the payment, we recommend waiting to do so until you have confirmed the funding instructions transfer has settled.
R03 No Account/Unable to Locate Account The account number structure is valid, and it passes the check digit validation, but the account number does not correspond to the individual identified in the entry, or the account number designated is not an open account. Reach out to your user and confirm the Routing Number, Bank Account Number, and the exact name on the bank account.

(You can request a copy of a voided check to use for verification.)

If this information does not exactly match what you initially entered, create a new Payment Instrument with the needed changes and submit the Funding Instructions again.
R04 Invalid Account Number The account number structure is not valid. The account number may have failed the check digit validation or has the wrong number of digits. Reach out to the user and request the correct bank account number.

(Request a copy of a voided check to verify the bank account number provided.)

Create a new Payment Instrument with the correct bank account number and submit the Funding Instructions again.
R05 Unauthorized Debit Entry The account number structure isn't valid. The account number may have failed the check digit validation or has the wrong number of digits. Don't re-submit the funding instruction to the same Payment Instrument. Any additional attempts will get returned unless your customer explicitly instructs their bank to accept them.

Reach out to the user and resolve any issues that caused the transaction to get disputed.

You can ask the user for another form of payment or a different bank account.

If you need to debit the same bank account, ask the user to call their bank and remove the block on transactions.

Unfortunately, there is no dispute resolution available within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was authorized correctly, please reach out to your Finix point of contact.
R06 Returned per ODFI’s Request The ODFI (Originating Depository Financial Institution) has requested that the RDFI (Receiving Depository Financial Institution) return the ACH entry. If the RDFI agrees to return the entry, the ODFI must indemnify the RDFI according to Article Five (Return, Adjustment, Correction, and Acknowledgment of Entries and Entry Information) of the ACH Rules. Reach out to your Finix point of contact.
R07 Authorization Revoked by Customer (adjustment entries) Authorization Revoked by Customer – Consumer, who previously authorized ACH payment, has revoked authorization from the Originator (must be returned no later than 60 days from the settlement date, and the customer must sign an affidavit). Immediately suspend any recurring payments entered for this bank account/Payment Instrument. This prevents additional transactions from being returned while you address the issue with the user.

Reach out to your user and resolve any issues that caused the funding instructions to get disputed.

You can ask the user for another form of payment or a different bank account.

If you need to debit the same bank account, instruct the user to call their bank and remove the block on transactions.

Unfortunately, there is no dispute resolution available within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was authorized correctly, please reach out to your Finix point of contact.
R08 Payment Stopped or Stop Payment on Item The Receiver of a recurring debit transaction has the right to stop payment on any specific ACH debit. The RDFI should verify the Receiver’s intent when a request to stop payment gets made to verify the request isn't intended to be a revocation of the authorization. Reach out to your user and resolve any issues that caused the funding instructions to stop.

You can try re-submitting the funding instructions again once you have proper authorization from the user. Alternatively, you can request another or different form of payment.
R09 Uncollected Funds A sufficient book or ledger balance exists to satisfy the dollar value of the transaction, but the dollar value of transactions in the process of collection (i.e., uncollected checks) brings the available and/or cash reserve balance below the dollar value of the debit entry. Try submitting the funding instructions again. You can try up to two more times within 30 days of the original authorization date.
R10 Customer Advises Not Authorized; Item Is Ineligible, Notice Not Provided, Signatures Not Genuine, or Item Altered (adjustment entries) For entries to Consumer Accounts that are not PPD debit entries constituting notice of presentment or PPD Accounts Receivable Truncated Check Debit Entries in accordance with Article Two, subsection 2.1.4(2), the RDFI has been notified by its customer, the Receiver, that the Originator of a given transaction has not been authorized to debit his account.[For entries to Consumer Accounts that are not PPD Accounts Receivable Truncated Check Debit Entries in accordance with Article Two, subsection 2.1.4(2) (Authorization/Notification for PPD Accounts Receivable Truncated Check Debit Entries), the RDFI has been notified by its customer, the Receiver, that the Originator of a given transaction has not been authorized to debit his account. Immediately suspend any recurring payments for this bank account/Payment Instrument. This prevents additional transactions from being returned while you address the issue with the user.

Reach out to your user and resolve any issues that caused the funding instructions to get disputed or canceled.

You can ask the user for another form of payment or a different bank account.

If you need to debit the same bank account, instruct your user to call their bank and remove the block on transactions.

Unfortunately, there is no dispute resolution available within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was authorized correctly, please reach out to your Finix point of contact.
R11 Customer Advises Entry Not in Accordance with the Terms of the Authorization Used by the RDFI to return an entry for which the Originator and Receiver have a relationship, and an authorization to debit exists, but there is an error or defect in the payment such that the entry does not conform to the terms of the authorization. (i.e., “an incorrect amount,” “payment was debited earlier than authorized” ) For ARC, BOC, or POP errors with the original source document and errors may exist. (i.e., “document is ineligible”, “notice was not provided to Receiver”, “amount was not accurate per the source document”) Reach out to your user and resolve any issues that caused the funding instructions to get disputed or canceled. You’ll need to submit the funding instructions again.
R12 Branch Sold to Another DFI A financial institution may continue to receive entries destined for an account at a branch that has been sold to another financial institution. Because the RDFI no longer maintains the account and is unable to post the entry, it should return the entry to the ODFI. Reach out to the user and obtain a new Routing Number and Bank Account Number. Create a new Payment Instrument with the information and submit the funding instructions again to this new instrument.
R13 RDFI not qualified to participate Financial institutions are not qualified to participate in ACH, or the routing number is incorrect. Verify the Routing Number is correct. If necessary, reach out to the user to verify bank information. You’ll need to submit the funding instructions again.
R14 Representative Payee Deceased or Unable to Continue in that Capacity The representative payee is a person or institution authorized to accept entries on behalf of one or more other persons, such as legally incapacitated adults or minor children. The representative payee is either deceased or unable to continue in that capacity. The beneficiary is not deceased. Reach out to the user and request another form of payment.
R15 Beneficiary or Account Holder (Other Than a Representative Payee) Deceased (1) The beneficiary is the person entitled to the benefits and is deceased. The beneficiary may or may not be the account holder; or(2) The account holder (acting in a non-representative payee capacity) is an owner of the account and is deceased. Reach out to the user and obtain a new Routing Number and Bank Account Number. Create a new Payment Instrument and submit the funding instructions again to this new instrument.
R16 Account Frozen The funds in the account are unavailable due to specific action taken by the RDFI or by legal action. Reach out to the user and request a different form of payment. You won't be able to process any transactions using this bank account until it is un-frozen.
R17 File Record Edit Criteria (Specify) Some fields that are not edited by the ACH Operator are edited by the RDFI. If the entry cannot be processed by the RDFI, the field(s) causing the processing error must be identified in the addenda record information field of the return. Verify the Routing and Account Number are correct. If necessary, reach out to the user to verify bank information. If the information is correct, request a different form of payment. You’ll need to submit the funding instructions again.
R20 Non-Transaction Account The ACH entry is destined for a non-transaction account. This would include either an account against which transactions are prohibited or limited. Contact your user for another form of payment or a different bank account.
R23 Credit Entry Refused by Receiver The Receiver may return a credit entry because one of the following conditions exists: (1) a minimum amount required by the Receiver has not been remitted; (2) the exact amount required has not been remitted; (3) the account is subject to litigation and the Receiver will not accept the transaction; (4) acceptance of the transaction results in an overpayment; (5) the Originator is not known by the Receiver; or (6) the Receiver has not authorized this credit entry to this account. Reach out to the user and resolve any issues that could have caused the transaction to be stopped or refused.

Alternatively, you can send your customer a paper check for the refund amount.
R29 Corporate Customer Advises Not Authorized The RDFI has been notified by the Receiver (non-consumer) that the Originator of a given transaction has not been authorized to debit the Receiver’s account. Immediately suspend any recurring payments scheduled for this bank account/Payment Instrument. This prevents additional transactions from being returned while you address the issue with the user.

Contact your user for another form of payment or a different bank account.

If you need to debit the same bank account, instruct your customer to call the bank and remove the block on transactions.

Unfortunately, there is no dispute resolution available within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was authorized correctly, please reach out to your Finix point of contact.

Payment Facilitator (Finix Core) For Benefit Of (FBO) Management

In the event, a Funding Transfer fails:

  • For a credit payout, the merchant gets credited back to the FBO Account.
  • If a debt funding instruction gets returned, the money gets removed from the FBO.

Notification of Change

A Notification of Change (NOC) is a notice sent from a customer’s bank detailing the information that changed in a transaction to allow it to be successful.

e.g., If you paid out one of your merchants, and they accidentally put the wrong routing number or bank account number. Instead of the transaction failing, a NOC gets generated as the bank successfully delivers the payout to the merchant.

The NOC informs the Payment Facilitator of what occurred and provides the necessary information to rectify the issue.

Code Description Next Steps
C01 Incorrect account number Update the Payment Instrument with the correct account number
C02 Incorrect routing/transit number Update the Payment Instrument with the correct routing number
C03 Incorrect routing/transit number and incorrect account number Update the Payment Instrument with the correct routing and account number
C04 Incorrect account name Update the Payment Instrument with the correct account name