GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
PAYMENTSSIGNAL

The interactive academy for the standards, messages, and rails that move money.

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ACH (US BATCH, NACHA)

Returned through the batch: an ACH entry the RDFI cannot apply

Trigger: Nordbank cannot apply the entry — insufficient funds (R01) or account closed (R02) — after the settlement window already completed.

Contributor Shubham Mathure

What operations sees first: A payment that appeared to settle comes back later through the ACH network with a return reason code.

WHERE IS THE MONEY?

Returned to the originator after the return settled in a later window — the receiver was never paid.

DID SETTLEMENT HAPPEN?

Original window settled, then reversed by a separately batched and netted return.

WHO ACTS NEXT?

Nordbank (RDFI) The originator confirms the receiver account details and re-originates the entry.

PLAY THE EXCEPTION

Trigger: Nordbank cannot apply the entry to the receiver's account — for a debit the funds are insufficient (R01), or the account is closed (R02) — after the settlement window already completed.

STEP 1 / 10MESSAGE

Asha Traders submits the payroll file

Asha Traders (Originator) → Bank Alfa (ODFI) · ACH payroll file (PPD credit entries)

The employer instructs its bank to pay wages. It sends a payroll ACH file of credit entries to Bank Alfa, its Originating Depository Financial Institution (ODFI). This is an instruction, not money.

Step 1 of 10: Asha Traders submits the payroll file

  1. 01Message
    Asha Traders submits the payroll fileAsha Traders (Originator) → Bank Alfa (ODFI) · ACH payroll file (PPD credit entries)
  2. 02Processing
    Bank Alfa validates and batches the entriesBank Alfa (ODFI)
  3. 03Message
    Bank Alfa transmits the batch to an ACH OperatorBank Alfa (ODFI) → ACH Operator (Fed / TCH) · ACH batch transmission
  4. 04Clearing obligation
    The ACH Operator sorts and delivers entries to NordbankACH Operator (Fed / TCH) → Nordbank (RDFI)
  5. 05Settlement
    Interbank positions settle, netted, in central bank moneyBank Alfa (ODFI) → Nordbank (RDFI)
  6. 06 · EXCEPTION PATHProcessing
    Nordbank cannot apply the entryNordbank (RDFI)
  7. 07 · EXCEPTION PATHMessage
    Nordbank returns the entry through the networkNordbank (RDFI) → ACH Operator (Fed / TCH) · ACH return entry (R-code)
  8. 08 · EXCEPTION PATHClearing obligation
    The operator relays the return to Bank AlfaACH Operator (Fed / TCH) → Bank Alfa (ODFI)
  9. 09 · EXCEPTION PATHSettlement
    The return settles back to Bank AlfaNordbank (RDFI) → Bank Alfa (ODFI)
  10. 10 · EXCEPTION PATHPosting
    Bank Alfa re-credits Asha TradersBank Alfa (ODFI)
  11. OUTCOME
    Funds
    Returned to Asha Traders after the return settled — Riya was never paid.
    Settlement
    Original window settled, then reversed by a separately batched and netted return in a later window.
    Who acts next
    Nordbank (RDFI) — Asha Traders confirms Riya's current account details and re-originates the payroll entry.
Full step-by-step text (works without JavaScript)
  1. 01Message
    Asha Traders submits the payroll fileAsha Traders (Originator) → Bank Alfa (ODFI) · ACH payroll file (PPD credit entries)

    The employer instructs its bank to pay wages. It sends a payroll ACH file of credit entries to Bank Alfa, its Originating Depository Financial Institution (ODFI). This is an instruction, not money.

  2. 02Processing
    Bank Alfa validates and batches the entriesBank Alfa (ODFI)

    The ODFI checks the file against Nacha technical standards (routing numbers, formats, totals), screens the entries, and batches them for a submission window. Nothing has moved between banks yet.

    Screening checkpoint: ODFI originator and entry screening — The originating bank screens the batch against sanctions lists before it goes into the ACH network.

  3. 03Message
    Bank Alfa transmits the batch to an ACH OperatorBank Alfa (ODFI) → ACH Operator (Fed / TCH) · ACH batch transmission

    The ODFI sends the batched file to one of the two ACH Operators — the Federal Reserve or The Clearing House. Nacha writes and enforces the rules, but the operator is the party that processes the entries.

  4. 04Clearing obligation
    The ACH Operator sorts and delivers entries to NordbankACH Operator (Fed / TCH) → Nordbank (RDFI)

    The operator sorts every entry by routing number and delivers each one to the receiving bank. Delivery makes the entry an obligation for the settlement window — it is not yet a movement of money.

    Delivered entries are obligations to be settled in this window. ACH is a batch system: entries are grouped and processed together, not one-by-one in real time.

  5. 05Settlement
    Interbank positions settle, netted, in central bank moneyBank Alfa (ODFI) → Nordbank (RDFI)

    The operator nets each bank's total credits and debits and settles the net positions across the banks' Federal Reserve accounts at the scheduled window. Only now does money actually move between Bank Alfa and Nordbank.

    • DR Bank Alfa settlement account at the Federal Reserve — USD 2,000.00
    • CR Nordbank settlement account at the Federal Reserve — USD 2,000.00
  6. 06 · EXCEPTION PATHProcessing
    Nordbank cannot apply the entryNordbank (RDFI)

    The receiving bank finds it cannot post the entry — insufficient funds on a debit, or a closed account — so it assigns a Nacha return reason code. Settlement already happened, so the money must travel back.

  7. 07 · EXCEPTION PATHMessage
    Nordbank returns the entry through the networkNordbank (RDFI) → ACH Operator (Fed / TCH) · ACH return entry (R-code)

    The RDFI creates a return entry carrying the reason code and sends it back to the ACH Operator. ACH returns are governed by Nacha rules and travel back through the same batch network, not instantly.

  8. 08 · EXCEPTION PATHClearing obligation
    The operator relays the return to Bank AlfaACH Operator (Fed / TCH) → Bank Alfa (ODFI)

    The operator delivers the return entry to the originating bank in a later batch cycle, creating the reverse obligation to be settled in a future window — the return follows the normal batch timing.

    The return is itself a batched entry: it is delivered as an obligation and settled on the deferred, netted basis, so recovery is not immediate.

  9. 09 · EXCEPTION PATHSettlement
    The return settles back to Bank AlfaNordbank (RDFI) → Bank Alfa (ODFI)

    The return nets and settles across the banks' Federal Reserve accounts in a later window — money moves back from Nordbank to Bank Alfa on the same deferred, netted basis as the original.

    • DR Nordbank settlement account at the Federal Reserve — USD 2,000.00
    • CR Bank Alfa settlement account at the Federal Reserve — USD 2,000.00
  10. 10 · EXCEPTION PATHPosting
    Bank Alfa re-credits Asha TradersBank Alfa (ODFI)

    The originating bank posts the returned amount back to the employer's account, with the Nacha reason code available to explain why the wage could not be delivered.

    • CR Asha Traders' account at Bank Alfa — USD 2,000.00
  11. OUTCOME
    Funds
    Returned to Asha Traders after the return settled — Riya was never paid.
    Settlement
    Original window settled, then reversed by a separately batched and netted return in a later window.
    Who acts next
    Nordbank (RDFI) — Asha Traders confirms Riya's current account details and re-originates the payroll entry.

THE TIMELINE

  1. 01Bank Alfa (ODFI)
    Originates the ACH credit and transmits the batch to an ACH Operator (the Federal Reserve or The Clearing House).
  2. 02ACH Operator (Fed / TCH)
    Sorts and delivers the entry to Nordbank; the banks settle net in a scheduled window.
  3. 03Nordbank (RDFI)
    Cannot apply the entry and assigns a Nacha return reason code (R01 / R02), returning it through the network.

    ACH returns are governed by Nacha rules and travel back through the batch cycle, not instantly.

  4. 04Bank Alfa (ODFI)
    Receives the settled return in a later window and re-credits the originator with the reason code.

Resolution: ACH is batch and deferred-net, so a failed entry returns through the same network on a later window. The originator is re-credited and corrects the details.

LEARN THE CONCEPTS

Sources for this scenario2
  1. Official requirement

    ACH Network and Nacha Operating Rules ↗ — Nacha · return entries / R-codes

    Governs the US ACH Network: batch credit and debit transfers between an ODFI and an RDFI, cleared by the two ACH Operators (the Federal Reserve and The Clearing House) and settled on a deferred, netted basis. Same Day ACH runs defined intraday windows with a per-payment limit of USD 1,000,000 (effective 18 March 2022; scheduled to rise to USD 10,000,000 on 17 September 2027). · Checked 2026-07-14

    Nacha writes and enforces the Operating Rules but does not itself process ACH payments.

  2. Simplified educational illustration

    Payments Signal editorial teaching models — Payments Signal

    This site's own simplified teaching models. · Checked 2026-07-12

    What this simplifies: Single-cycle teaching model; participant-specific handling and exact windows vary.

    Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.