Managing and understanding ACH payments can be a bit complex! This article will cover what ACH is, the standard process for Virtuous Payments, and how returns are handled.
What is ACH payment?
ACH, or Automated Clearing House, is a U.S. financial network used to facilitate electronic payments and bank transfers. This is also known as “direct payments”. ACH payments your donors to transfer money from their bank account to your organization's bank account without using paper checks, credit card networks, wire transfers, or cash. If a donor has chosen to use ACH as their means of payment for a recurring donation, you can expect those recurring donations to move in line with the process outlined in this article.
Status Definitions
Processing - The request has been sent to the bank
Successful - The transaction has been paid but not necessarily debited from the donor's account
Voided - The donor's bank will not honor the transaction for any number of reasons. The voided status will come back with the return reason.
Process
When a Virtuous Giving Form is submitted, two processes begin at the exact same time.
1. The transaction is sent to the donor's bank and the in-app status for the transaction is "Processing". 2. The funds are held for 5 days and the in-app status reflects as "Processing".
Typically, the donor bank will either Fund or Reject the transaction within the 5-day hold window.
If the transaction is funded, the dollar amount will be released to your organization's bank account, the transaction status will update to "Successful", and the positive gift amount will be included in the Payout Report.
If the transaction is Rejected, the transaction status will be updated to "Voided" and a Return Reason will be assigned to the transaction.
In some instances, the donor bank will take longer than the 5-day holding window and the funds will be released to your organization before the transaction is "Funded" or "Rejected". In these situations, if a transaction returns as "Rejected", the funds will be removed or "clawedback" from your organization. This will result in a negative gift amount displayed in the Payout Report.
Please refer to the flow diagram below for further context.
Returns
When a transaction is rejected, a Return Reason will be assigned. The possible Return Reasons are listed below.
Insufficient funds (R01)
Account closed (R02)
No account/unable to locate account (R03)
Invalid account number (R04)