Understanding Fees and Processes for Failed eCheck (ACH) Payments
Overview
Failed eCheck (ACH) payments can incur fees and occur for various reasons, including incorrect account information. This guide explains the fees associated with failed eChecks, the reasons for payment failures, and how to resolve such errors for successful reprocessing. Additionally, it will cover fee recovery, billing processes, and frequently asked questions to better manage such scenarios.
Fees for Failed eCheck Transactions
Return Fee: - A failed eCheck transaction incurs a $10 return fee for each failed attempt. This fee applies when the bank declines the transaction. Failure reasons such as insufficient funds or incorrect account information will be common returns.
Processing Fee: - The standard 1% processing fee is charged for each eCheck transaction attempt. This means that even if an eCheck fails, the processing fee is still applied. Additionally, a failed eCheck transaction from the client’s bank incurs a $0.20 transaction fee.
Common Reasons for Failed eCheck Transactions
A failed eCheck with an error message such as "No Account/Unable to Locate Account" often indicates issues with the bank account information provided. Common causes include:
Incorrect routing or account number entered by the client (e.g., transposed digits or extra spaces).
The account is closed or does not exist.
Details entered do not match what’s on file with the bank.- The account is flagged by the bank due to unusual activity or suspected fraud.
An asynchronous error occurs during the bank's end-to-end processing of the transaction.
Billing Processes, Fee Recovery, and FAQs
Recording and Billing NSF Fees
If you encounter NSF fees due to bounced checks or rejected transactions, you can recover these costs from clients by appropriately recording and billing them. CPACharge recommends the following:
Navigate to Billing > Expenses.
Select Add Expense.
Choose the associated case or matter.
Input the date the bank withdrew funds for the failed transaction.
Mark the cost as a Hard Cost.
Enable the toggle for Expense Paid.
Assign the fee to the Operating Account. If only one party in a split bill caused the NSF fee, create a separate invoice for that party and include the fee.
Frequently Asked Questions (FAQs)
Who charges the NSF fee on failed transactions?
The NSF fee is almost always imposed by the client’s bank. CPACharge has no role in charging NSF fees unless stated otherwise in billing statements.
What fees can a merchant expect if a payment fails?
For eChecks/ACH, merchants will see a $10 reject fee. For card transactions, only a $0.20 transaction fee per failed attempt is charged.