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When a Receiving Bank Can’t Complete the Transaction
The ACH network is designed to transfer funds reliably between financial institutions—but it depends on every bank in the chain being able to settle the transaction. If the receiving bank is unable to complete its part of the process, the transaction gets kicked back.
That’s when you’ll see ACH Return Code R32.
This return code is uncommon, but when it shows up, it means the receiving bank had an issue preventing it from settling the transaction. Let’s go over what R32 – RDFI Non-Settlement means, why it happens, and what steps you should take when it occurs.
What Does ACH Return Code R32 Mean?
ACH Return Code R32 stands for:
“RDFI Non-Settlement.”
Here’s NACHA’s official definition:
R32 – RDFI Non-Settlement: The receiving depository financial institution (RDFI) was unable to settle the transaction.
Translation: the bank on the receiving end of the payment couldn’t complete its part of the ACH process, so the transaction was returned.
This isn’t about the recipient’s account or authorization—it’s about the receiving bank’s ability to process the transaction through the Federal Reserve or ACH system.
What Causes an R32 Return?
ACH Return Code R32 usually results from problems at the bank level. Common causes include:
The RDFI is under regulatory restrictions or administrative actions
The RDFI is in the process of closing or merging and cannot settle ACH entries
Technical failures or outages that prevent the transaction from settling
The RDFI is no longer participating in the ACH network or has been deactivated
Insufficient funds or settlement issues on the RDFI’s side of the Federal Reserve account
This is a bank infrastructure issue, not a problem with the customer or merchant.
How to Handle ACH Return Code R32
Here’s what to do if your transaction comes back with an R32 code:
1. Do Not Retry the Transaction Automatically
Since the issue lies with the receiving bank—not the account—you should not automatically resubmit the transaction without further investigation.
2. Contact the Receiving Party
Let your customer, vendor, or employee know that their bank was unable to settle the transaction. Ask if they have an alternate bank account or a different financial institution they’d like to use.
3. Ask for Updated Bank Information
If the RDFI is known to be undergoing changes (e.g., closing, merging), your customer may already have a new account elsewhere. Collect and verify the new routing and account number before reprocessing the payment.
4. Check With Your ACH Provider
Your ACH processor or bank may be able to confirm whether the RDFI is experiencing ongoing settlement problems. They can also help verify routing numbers and offer advice on next steps.
How to Avoid R32 Returns in the Future
While R32 returns are rare and typically outside your control, you can minimize disruption by:
Using bank verification tools that flag inactive or non-participating RDFIs
Asking for updated payment info if you know a receiving bank is being acquired or closed
Maintaining up-to-date contact info for customers so you can quickly resolve payment issues
Working with a payment processor that actively monitors for ACH network updates and bank changes
In cases where you regularly pay or bill clients at smaller or regional banks, it helps to stay informed about their status in the ACH network.
Get ACH Processing With Durango
ACH Return Code R32—“RDFI Non-Settlement”—means the receiving bank couldn’t complete the transaction due to its own operational or financial limitations. While not something you can always prevent, it’s important to respond promptly and professionally to avoid delays in payment or service.
At Durango Merchant Services, we help businesses navigate ACH returns, manage payment exceptions, and reduce disruption across all transaction types—especially in high-risk, high-volume, or multi-institution environments.
