ACH Chargebacks

ACH chargebacks are a process by which a customer can dispute a charge on their bank account that was made through the Automated Clearing House (ACH) network. ACH chargebacks can occur for a variety of reasons, such as unauthorized transactions, incorrect amounts, or errors in account information.

When a customer initiates an ACH chargeback, the bank that processed the original transaction will investigate the claim and make a determination on whether theACH Integration charge should be refunded to the customer. If the chargeback is approved, the funds will be returned to the customer and the merchant will be charged a fee.

There are several steps that merchants can take to prevent ACH chargebacks. One of the most important is to ensure that customers are fully informed about the transaction before it takes place. This can include providing detailed information about the product or service being purchased, as well as the terms and conditions of the sale.

ACH Integrated partners should call the REST API for settlement status in order to report and inform their merchant users about Unfunded transactions, which typically are Chargebacks.

Another important step is to ensure that account information is accurate and up-to-date. This includes verifying that the customer’s account number, routing number, and other information is correct before processing the transaction.

Merchants should also be vigilant about monitoring transactions for suspicious activity, such as multiple transactions from the same account in a short period of time or large transactions that are out of the ordinary. If a merchant suspects that a transaction may be fraudulent, they should contact the customer and their bank immediately.

In addition, merchants should have a clear and easy-to-use dispute resolution process in place for customers who wish to initiate an ACH chargeback. This should include instructions on how to file a claim, as well as a contact email or phone number for assistance.

Overall, ACH chargebacks can be a frustrating and costly experience for merchants, but by taking steps to prevent them and having a clear dispute resolution process in place, merchants can minimize their risk and ensure that the process is as smooth as possible for both the merchant and the customer.

About Gene

Gene is a 24 year veteran of the electronic payments industry and has consulted with countless companies of all sizes. He has overseen large underwriting portfolios, directed IT staff, and currently serves as the Director of Business Development. Gene has appeared before the U.S. Congress to provide expert opinions regarding developing technology and transaction risks towards solutions for the payroll industry. You can find him on LinkedIn>.