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When a Customer Says “No Thanks” to a Payment
ACH payments are a reliable and widely used way to send funds directly to a customer, employee, or vendor’s bank account. But once in a while, a credit transaction gets rejected—not because of a technical issue, but because the person or business receiving the money refused it.
That’s exactly what’s happening when you see ACH Return Code R23.
While not as common as some other return codes, R23 is one you’ll want to understand, especially if you send out disbursements, refunds, or payroll. Let’s look at what this code means, why a receiver might refuse a payment, and how to handle it.
What Does ACH Return Code R23 Mean?
ACH Return Code R23 stands for:
“Credit Entry Refused by Receiver.”
Here’s the official definition from NACHA:
R23 – Credit Entry Refused by Receiver: The Receiver of a credit entry has notified their bank (RDFI) that they are refusing the funds.
In other words, the recipient asked their bank not to accept the ACH credit—so the bank rejected it and sent the funds back to you.
Why Would Someone Refuse a Credit Entry?
There are a few reasons why someone might tell their bank to refuse an ACH deposit:
They weren’t expecting the payment and believe it was sent in error
The payment came from an unknown source, raising fraud concerns
They’ve already been paid or refunded by another method
There’s a legal or compliance issue, like a bankruptcy or garnishment
They don’t recognize your business name on the bank statement
The account holder is deceased or no longer manages the account
In some cases, the refusal might be temporary—like when a customer wants the funds sent to a different account instead.
How to Handle ACH Return Code R23
An R23 return doesn’t necessarily mean you did something wrong—but you’ll still want to follow up to find out what happened. Here’s how to handle it:
1. Review the Payment Details
Double-check the transaction: Was the amount correct? Was it sent to the right account? Did the timing align with the customer’s expectations?
2. Contact the Receiver (If Appropriate)
If you have a relationship with the recipient (e.g., a customer or employee), contact them directly. Ask if they refused the payment and why. Often, it’s just a miscommunication.
3. Ask for Updated Payment Instructions (If Needed)
If they want the funds sent to a different account—or if the original account is closed or inactive—ask for updated banking information and proper authorization to resend the payment.
4. Resend the Payment (If Appropriate)
Once everything is clarified, and you’ve verified the correct account, you can send the payment again. Make sure your records are updated to prevent another return.
5. Resubmit the Payment
Maintain a record of the R23 return and your follow-up communication in case there are questions later on or if an audit trail is needed.
How to Avoid R23 Returns in the Future
While you can’t prevent someone from refusing a payment, you can reduce the odds by:
Letting customers or employees know when to expect a payment
Using a recognizable company name or description on the ACH entry
Verifying account info before sending large or one-time credits
Avoiding duplicate payments, which are a common reason for refusals
Making sure you have a valid and current authorization for all payments
Keeping your recipients informed and your records up to date helps reduce confusion and builds trust.
Get ACH Processing With Durango
ACH Return Code R23—“Credit Entry Refused by Receiver”—means the person or business you tried to pay decided not to accept the funds. It’s not a technical glitch—it’s usually a mix-up, a duplicate payment, or a request to send funds elsewhere.
At Durango Merchant Services, we help businesses streamline ACH disbursements, avoid return codes, and manage compliance—especially in industries where payment issues can be costly or complex.
