R20 Return Code: Understanding "Non-Transaction Account" in ACH Processing

Introduction

ACH payments provide a seamless way to transfer funds electronically, but errors can occur if the receiving account is not eligible for ACH transactions. When an ACH debit or credit is sent to a non-transaction account, the payment is rejected, triggering an R20 return code.

The R20 return code means that the recipient’s bank account cannot process ACH debits or credits due to its nature or restrictions. This return code often occurs when businesses attempt to debit savings accounts, investment accounts, or loan accounts that do not support ACH transactions.

This blog will explain why R20 return codes occur, how to resolve them, and how businesses can prevent ACH failures by identifying transaction-eligible accounts in advance.

What the R20 Return Code Means for ACH Payments

The R20 return code occurs when an ACH transaction is rejected because the destination account is not set up to receive ACH payments. Banks categorize certain accounts as non-transaction accounts, meaning they are restricted from electronic withdrawals or deposits.

Common Causes of R20 Return Code Errors

• Attempting to Debit a Savings Account: Some banks restrict ACH debits from savings accounts to prevent excessive withdrawals.

• Using a Loan or Credit Account for ACH Payments: Loan, credit card, and mortgage accounts are typically not eligible for direct ACH transactions.

• Sending ACH Payments to an Investment or Brokerage Account: These accounts are designed for investment purposes, not routine transactions, and often reject ACH debits.

• Account Type Restrictions Set by the Bank: Some banks limit ACH access to certain accounts for regulatory or policy reasons.

Example Scenario

A business processes a monthly ACH debit for a customer’s subscription, but the transaction fails with an R20 return code. After investigating, the business discovers that the customer provided a loan account number instead of a checking account, causing the ACH failure.

How to Fix ACH Transactions Rejected Due to R20

When an ACH transaction is returned with an R20 error, businesses must take steps to identify the issue, correct the account information, and resubmit the payment if possible.

Steps to Resolve R20 Return Code Issues

1. Contact the Customer for Correct Account Information

• Notify the customer that their ACH payment failed due to an ineligible account type.

• Request a transaction-eligible checking account to process the payment successfully.

2. Verify the Account Type Before Resubmitting

• If the customer provides a new account number, verify whether it supports ACH transactions.

• Some banks allow ACH debits from savings accounts, while others impose restrictions on withdrawals—confirm this with the customer’s financial institution if necessary.

3. Offer Alternative Payment Methods

• If the customer does not have a transaction-eligible account, provide other payment options such as:

  • Credit or debit card payments

  • Wire transfers

  • Checks or manual bank transfers

4. Update Payment Records to Prevent Future Errors

• Correct the customer’s account details in your system to avoid repeated R20 return codes.

• If your system allows automatic ACH retries, disable reattempts for the non-transaction account.

Avoiding R20 Errors: Identifying Transaction-Eligible Accounts

To prevent ACH failures due to non-transaction accounts, businesses should implement account verification measures before processing payments.

Best Practices to Prevent R20 Return Code Errors

1. Verify Accounts Before Processing ACH Payments

• Use account validation tools to check whether a customer’s bank account supports ACH transactions.

• Implement real-time account verification APIs to reduce errors before initiating payments.

2. Request a Checking Account for ACH Debits

• Inform customers that ACH payments should be made from a checking account, not a savings or loan account.

• Include clear instructions in payment authorization forms to prevent incorrect account submissions.

3. Use ACH Pre-Notification Transactions

• Send a zero-dollar pre-note transaction to test an account before initiating actual ACH debits.

• This helps detect non-transaction accounts before processing payments.

4. Educate Customers About Account Restrictions

• Many customers are unaware that certain accounts do not support ACH transactions.

• Provide educational resources explaining which account types are eligible for ACH payments.

5. Utilize Profituity’s PlatformNext for ACH Optimization

Profituity’s PlatformNext helps businesses reduce ACH errors like R20 by offering:

• Automated account verification before processing payments.

• Real-time notifications for potential account eligibility issues.

• Seamless ACH transaction management to prevent return codes and payment failures.

How Profituity’s PlatformNext Helps Reduce R20 Return Codes

Profituity’s PlatformNext provides advanced ACH processing solutions that help businesses eliminate payment failures due to non-transaction accounts.

• Automated Account Validation: Ensures bank accounts support ACH transactions before payment processing.

• Pre-Transaction Account Checks: Detects non-transaction accounts early to avoid R20 errors.

• Real-Time Alerts: Notifies businesses when a customer provides an ineligible account number.

• Seamless ACH Integration: Optimizes payment workflows to reduce transaction failures.

Schedule a demo today to see how Profituity’s PlatformNext can help your business prevent R20 return code issues and improve ACH payment success rates.