Introduction: What Are ACH Return Codes?
If your business accepts payments through bank transfers, you’ve likely used the ACH network—even if you didn’t realize it. ACH, short for Automated Clearing House, is a system that moves money electronically between bank accounts. It powers everything from direct deposit and bill pay to B2B transfers and recurring subscriptions.
While ACH transfers are a reliable and affordable way to handle payments, they’re not immune to issues. When something goes wrong—maybe the account number is incorrect or the customer revoked authorization—the bank sends back what’s called an ACH return code. These codes help explain why a payment didn’t go through so you can resolve the issue and, if needed, try again.
Today, we’re diving into ACH Return Code R02, one of the more common codes businesses encounter.
What is ACH?
The Automated Clearing House (ACH) is a U.S. financial network that handles batch processing of electronic payments between banks. Instead of moving money instantly like a wire transfer, ACH transfers are grouped into batches and processed several times throughout the day. It’s slower than some other payment methods but much cheaper and widely used for payroll, mortgage payments, subscription billing, and online purchases.
For businesses, ACH is a go-to for reducing credit card fees and automating payments. But when something isn’t right with the transaction, you’ll get a return code that tells you why the bank couldn’t complete it.
What Does ACH Return Code R02 Mean?
ACH Return Code R02 means “Account Closed.”
In plain terms, this code is sent back when the receiving bank account has been shut down by the account holder—or in some cases, by the bank itself. That means any transaction trying to pull funds from or deposit funds into that account is going to bounce back.
Here’s how NACHA (the organization that governs the ACH network) defines R02:
R02 – Account Closed: A previously active account has been closed by the customer or the receiving bank. Any entries directed to this account will be returned.
This often happens when a customer changes banks and forgets to update their payment info. It can also occur when someone closes a business or joint account, or when a bank shuts down an account due to inactivity, fraud, or overdraft problems.
How to Fix ACH R02 Return Code
Getting hit with an R02 return code doesn’t mean the end of the transaction—it just means there’s some cleanup to do. Here’s what you can do next:
1. Reach Out to the Customer
Start by contacting the customer or client whose account returned the R02 code. Let them know the bank account on file is closed and ask for updated payment information. Most people won’t realize this happened until you bring it to their attention.
2. Verify the New Banking Info
Once you get updated account details, double-check that the routing and account numbers are entered correctly. You can also use a bank verification service or micro-deposit method to confirm the account is active before sending another ACH payment.
3. Get Fresh Authorization
If you’re processing recurring payments or subscriptions, make sure you collect a new ACH authorization (written or electronic) for the new account. This helps protect your business in case of future disputes or returns.
4. Resubmit the Payment
Once you have the correct info and proper authorization, you can safely resubmit the payment through your ACH processor. If your payment platform supports it, you might also be able to automate the retry process for these kinds of returns.
Wrap-Up
ACH Return Code R02—“Account Closed”—is a common hiccup in the world of electronic payments. The good news is that it’s typically easy to fix. With a quick call or email to your customer, updated banking info, and the right tools, you can be back on track with minimal disruption.
At Durango Merchant Services, we help businesses—especially those in high-risk industries—navigate the ins and outs of ACH processing, returns, and payment gateway integrations. If you’re seeing more ACH returns than you’d like or need a partner who understands the tricky stuff other providers avoid, we’ve got your back.
Let’s get your payments flowing again—no guesswork required.
