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When a Payment Meant for Another Country Is Sent the Wrong Way
Sending payments internationally through the ACH network involves extra steps—and a lot more precision. If a payment meant to go overseas isn’t coded properly, it can cause confusion, delays, and rejected transactions.
That’s when you’ll run into ACH Return Code R85.
Let’s break down what R85 – Incorrectly Coded Outbound International Payment means, why it happens, and how you can fix it if it shows up in your ACH reports.
What Does R85 Actually Mean?
ACH Return Code R85 stands for:
“Incorrectly Coded Outbound International Payment.”
Here’s the official NACHA definition:
R85 – Incorrectly Coded Outbound International Payment: A payment that should have been classified as an International ACH Transaction (IAT) was instead sent using a Standard Entry Class (SEC) code meant for domestic transactions.
In other words:
You sent an international payment, but labeled it like a domestic one—and the system caught the mistake.
Why an R85 ACH Return Happens
Here are the most common causes behind an R85 return:
The payment contained foreign elements (such as a non-U.S. bank, recipient, or country code) but was sent using a domestic ACH format like PPD, CCD, or WEB.
The Standard Entry Class (SEC) code didn’t match the true nature of the transaction.
Your payment system didn’t properly flag the transaction as international at the time it was created.
Manual errors during ACH file creation where international indicators were missed.
Bottom line: when money is headed outside the U.S., the ACH network requires it to be classified and processed differently.
What to Do When You Get an ACH R85 Return
Step 1: Review the Original Payment Details
Look at the payment closely—does it involve a foreign bank, country, or beneficiary? Was it mistakenly sent using a domestic ACH code?
Step 2: Prepare the Payment Correctly as an IAT
You’ll need to resubmit the transaction using the proper IAT format, which includes specific fields like the receiver’s country, purpose of payment, and full originator/receiver addresses.
Step 3: Update Your ACH System or Process
If your system failed to flag the transaction as international, you may need to adjust your settings or processes to better detect outbound international payments.
Step 4: Communicate With the Recipient (If Needed)
If the payment was time-sensitive, let the recipient know about the delay and when they can expect the corrected payment.
How to Prevent R85 ACH Errors Going Forward
The key to avoiding R85 issues is catching international payments early and coding them properly. Here’s how you can do that:
Use ACH software that automatically flags IAT-eligible payments
Train your payments team to recognize when a transaction involves a foreign element
Double-check recipient information before submitting payments
Set up automated workflows that separate domestic and international payments correctly
Work with an ACH provider that specializes in both domestic and international transactions
The earlier you spot international elements in a payment, the smoother the processing will be.
R85 ACH Error Is About Choosing the Right Lane
ACH Return Code R85—“Incorrectly Coded Outbound International Payment”—means you sent an international transaction down the wrong (domestic) path.
It’s not the end of the world—but correcting it quickly keeps your payments compliant, efficient, and trusted by your partners.
At Durango Merchant Services, we help businesses of all sizes manage both U.S. and international ACH payments properly—so you can avoid coding mistakes, reduce returns like R85, and keep your operations running smoothly.
