When a Customer Pulls the Plug on an ACH Payment
ACH payments are a great way to collect funds from customers—especially for subscriptions, invoices, or other recurring charges. But sometimes, a transaction gets rejected, and you’re left wondering what happened.
When a payment is returned, you’ll usually see a code that tells you why. One of the more important ones to understand—especially if you’re running a recurring billing model—is ACH Return Code R07. This one has to do with customer authorization, and it’s not one to ignore.
Let’s break down what it means, why it shows up, and how your business should handle it.
Quick Refresher: What Is ACH?
ACH stands for Automated Clearing House, a U.S.-based network that handles electronic payments between banks. It powers things like payroll, automatic bill pay, and business-to-customer transactions.
Unlike credit cards, ACH transfers are slower but much cheaper, especially for recurring payments and larger transactions. But when something goes wrong—like a revoked authorization—ACH payments can bounce back with a return code like R07.
What Does ACH Return Code R07 Mean?
ACH Return Code R07 stands for:
“Authorization Revoked by Customer.”
Here’s what NACHA (the organization that oversees the ACH network) has to say about it:
R07 – Authorization Revoked by Customer: The customer previously authorized the payment, but has since revoked that authorization directly with the originator (you).
In other words, the customer is saying, “I told them they could take this payment before, but I changed my mind—and I told them to stop.”
This is different from R10, where the customer claims they never authorized the payment at all. With R07, there was an agreement at one point, but they decided to end it.
Why Would a Customer Revoke Authorization?
Here are some common reasons:
They canceled a service or subscription but were still charged
They feel they weren’t given a way to cancel or stop billing
There was a breakdown in communication between the business and the customer
They simply changed their mind about the payment, service, or vendor relationship
Sometimes it’s valid. Other times, it’s a misunderstanding. Either way, once the customer contacts their bank and says they’ve revoked authorization, the bank is obligated to return the funds.
How to Handle ACH Return Code R07
Getting an R07 return means you need to stop billing that account until everything is cleared up. Here’s how to handle it the right way:
1. Stop All Future ACH Transactions
Once a customer revokes authorization, you cannot submit any more payments using that same authorization. Doing so could result in penalties or account issues with your processor.
2. Reach Out to the Customer
Ask for clarification. Was the authorization truly revoked? Was it an error or miscommunication? Sometimes customers forget to notify you before they contact their bank, and a quick conversation can clear things up.
3. Get New Authorization (If Appropriate)
If the customer is still interested in working with you, you’ll need a brand-new authorization to continue processing ACH payments. This can be written, electronic, or verbal (depending on your setup and compliance rules).
4. Update Your Records
Document everything. Keep a record of the return, the customer’s communication, and any new authorizations. This helps protect your business if future questions or disputes come up.
Tips to Prevent R07 Returns
While you can’t eliminate R07s entirely, there are some smart steps you can take to reduce them:
Make canceling services or recurring payments easy—don’t make people hunt for the exit
Send advance notices before recurring charges hit the account
Honor cancellations promptly and confirm them in writing or by email
Keep clear and accessible records of all ACH authorizations
The more transparency you offer, the less likely it is that a customer will go straight to their bank to stop a payment.
Get ACH Processing With Durango
ACH Return Code R07—“Authorization Revoked by Customer”—means your customer withdrew permission for you to take a payment from their bank account. Whether it’s due to a cancellation or confusion, the best response is to stop future charges immediately, communicate clearly, and rebuild trust if possible.
If you’re managing recurring payments or operating in a high-risk space, the way you handle ACH authorizations and disputes really matters. At Durango Merchant Services, we specialize in helping businesses like yours navigate these challenges with tools, support, and custom payment solutions.
