An ACH hold is when a payment is authorized by the owner of an account and the bank in charge of that account reserves (holds) the specified payment amount.

Holds exist because ACH payment processing takes time. In most cases, transactions are processed over a matter of days. The banks moving the funds need to be sure that money won’t be spent elsewhere before the ACH processing has been completed.

Standard ACH payment processing services offer ACH transfers on a four-day hold. However, many people don’t realize this refers to four business days.

Because ACH payments are batched and sent to the ACH network at the end of each day, the four-day count begins with processing the next morning. So no matter what day of the week an ACH payment is authorized, the ACH payment processing time usually takes about one week for funds to deposit in your company’s bank account after accounting for weekend days.

Your business can apply for shorter processing times, even same day ACH processing, but approval will depend on your ACH provider’s underwriting requirements.

Voiding an ACH payment can only be done before the payments have been batched and sent to the ACH network. This will stop the transaction from being submitted to the ACH network.

If the payment has not been stopped before the batch deadline, it must be credited to the consumer rather than voided.

However, many merchants may not be able to qualify for the ability to process an ACH credit through their ACH payment processor. Because crediting through the system requires a reserve of extra money to be kept in the merchant account, many businesses find it easier to refund money through paper checks or discounting the owed amount on a future payment.

Returned payments can add up. Although simple returns may cost a little less, the typical return fee for an ACH payment can be as high as $25.

A return a consumer initiates through their bank – called a chargeback return – will come with a heftier fee for the merchant. Returns due to administrative issues are less costly and are most times avoidable.

A simple way to prevent a chargeback return is to let consumers know what your company’s descriptor will look like on their bank statements. This will make sure they don’t contest the payment later on by not recognizing its origin.

You should also provide a customer service number on your receipt. It is always best that consumers can reach you with issues so they don’t have to contest a payment through their bank.

To avoid administrative returns, require dual authentication for the account number for online payments. Also, ensure your staff is trained correctly in how to use your payment processing system so they don’t make any unnecessary errors.

There are also three acceptable reasons Nacha lists for consumers to dispute an ACH debit:

1. If the processed ACH payment was never authorized by the account holder or the authorization was revoked.

2. If the ACH payment was processed on a date earlier than authorized.

3. If the ACH payment is for an amount different than the amount the consumer authorized.

To combat these returns make sure you don’t leave consumers open to exercise these three types of disputes. This means obtaining the proper authorizations for one-time and recurring payments.