Customers have an itchy trigger finger today when it comes to reversing, or charging back, a transaction. In my experience working with merchants throughout the years here are some common sense techniques that can help reduce potential losses and keep your ACH account in good standing.

Just to get a little industry jargon out of the way.. the term ACH chargeback refers to return codes designated by NACHA rules as “unauthorized”. Those unauthorized return codes are (R05, R07, R10, R29). And you also might also be wondering.. who is NACHA? What is ACH?

ACH stands for Automated Clearing House. The ACH Network is a batch processing system governed by NACHA. NACHA is the Electronic Payments Association that manages the development, administration, and governance of the ACH Network, the backbone for the electronic movement of money and data. The ACH Network provides a safe, secure, and reliable network for direct account-to-account consumer, business, and government payments. Annually, it facilitates billions of Direct Deposit via ACH and Direct Payment via ACH transactions. (source:

Ok, enough with the jargon.. so how can you as a business owner stop ACH chargebacks from happening? Read on..
1) The best remedy to stop ACH unauthorized returns (aka chargebacks) is to avoid them from the onset.

Put a system in place to address customer returns and chargebacks before they start. You’d be surprised how many companies, big and small, don’t have a clear plan on how to address this part of their business. It doesn’t have to be complicated but you should have a specific process in place to deal with customers that want their money back. Consumers and Businesses are watching expenses more closely these days and are quick to call their bank to dispute a transaction. And once that happens it’s an uphill battle that could have been avoided.
2) Have a clear transaction descriptor that shows up on your customer’s bank statement.

This is probably one of the most overlooked items that can have a significant impact on avoiding chargebacks. Here’s what I mean.. have you ever looked at your bank statement and saw a transaction that you didn’t recognize? And there was no phone number or web site to contact? Or, you had to jump through hoops to find out what the transaction was for? THOSE are the types of situations where high probability of chargebacks can occur. So what do you do? When you setup your ACH account make sure a toll-free number and preferably a website address is setup to show on your customer’s bank statement. And TEST! As they say an ounce of prevention is worth a pound of cure. Run a live test transaction to hit your own bank account so you can see, first hand, how the descriptor will show up. Here’s another tip: If customers typically recognize you by the product/service brand they’re buying vs. the name of your company then set up your ACH account to have sub descriptor. You can pass this information so it shows up on your customer’s bank statement. Another way they can more easily recognize the transaction and call you vs. calling their bank to reverse the transaction.
3) Send an immediate customer notification of the refund using an SMS text service

(we can help you with that if you want to know more about it) and an email confirmation for good measure. Sending an email confirmation is good but the problems with email confirmation only are (a) they can get caught in spam and (b) people lose track of emails. It’s not enough to have a conversion with the merchant and let them know you’re going to refund them. They need proof. And the faster you give them proof the less likely they’ll call their bank to dispute the transaction. Texting is a great way for your unhappy customer to get immediate notification of the pending credit which will calm them down. You should list their name, amount of credit they’ll be receiving, and a confirmation/authorization code. You should also give them a direct phone number, email address, or allow them to reply to the text if they have questions during the time it takes for the money to show up in their account. Let them know it can take 2-5 days to see the money show up as a credit back to their account. AND if they have ANY questions to call you first. Text messages get read immediately and they’re easier to refer back to than an email.
4) Trying to “save the sale” can result in an increase in chargebacks.

It also can create much more damaging long-term affects by jeopardizing your ability to use the ACH network. The last person an unhappy customer wants to deal with is the person that sold them the service/product to begin with. So make it a policy to have someone else handle those calls/emails. Tip: setup a group email (e.g. returns at yourcompanydotcom) that has key individuals notified. If you employ a large sales team or external calls center to sell your product or service you can create unique sales IDs that can be passed with every transaction. This can give you the ability to drill down to find out exactly where your chargebacks are coming from. It could be a specific sales person that’s creating all your problems. With this kind of data you can nip these problems in the bud.
5) Send email and text reminder notifications before a scheduled transaction is to be debited from a customers bank account.

This is a big deal particularly if you do quarterly or annual billing. People forget so you need to remind them. Give your customers every opportunity to call you first and not their bank because they didn’t recognize the charge.

Sometimes the most difficult thing is to see your business and the user experience through the eyes of your customers. So as you design this process for your specific business it would be helpful to ask some of your customers.. ”what would you need to see or hear to feel certain that this issue is being addressed?” Implement these 5 techniques to stop chargebacks before they start and remember.. an ounce of prevention is worth a pound of cure!

If you have questions on the information shared in this article, or need assistance with a processing solution, give us a call at 1-855-302-4325 or send us an email and let’s chat about your specific needs. I encourage you to share your comments. I hope you found this useful!