How to stop ACH payments

Automated Clearing House (ACH) transfers are a fast, secure payment method. But what if you make a mistake, like entering the wrong amount, sending a duplicate payment, or transferring funds to the wrong account? The sense of urgency to correct problems like this can be stressful.

Thankfully, if you act quickly, you may be able to cancel an ACH payment before it clears. And even if the bank has already processed the transaction, you can request an ACH reversal. Knowing how to do both can save you a lot of time, effort, stress, and money.

This guide explains how to stop ACH payments, covers ACH reversals, and shares examples of when you might need to cancel an ACH payment.

How to cancel an ACH payment

If you need to stop an ACH payment, you must act quickly to avoid any financial complications. Fortunately, it’s a simple, three-step process:

Step 1: Identify the payment

Pinpoint the exact ACH transaction you want to stop. Review your account online or via mobile banking, or look at your bank statement to find it. Gather all the relevant details, including the payment amount, recipient, scheduled date, and account number. Having this information ready helps ensure a smooth process when contacting your bank.

Step 2: Contact your bank immediately

Reach out to your bank or credit union as soon as possible and request a stop payment. You can call, visit a branch, or use online banking if the app offers a stop payment option. Provide all relevant transaction details.

Most banks require these requests to be made at least 3 business days before the scheduled payment date. If the payment has already begun processing, stopping it may not be possible.

Note that many banks charge a fee to stop an ACH payment. These fees typically range from $15–$35, depending on the financial institution’s policies and the payment method. Ask your bank about their ACH fees when you make the stop payment request.

Step 3: Confirm the stop payment

Be sure to get a confirmation or reference number from the bank in case you need to follow up about the request. Monitor your account to make sure the payment doesn't go through. If it does, contact your bank again to request an ACH reversal.

Reasons you might need to stop an ACH payment

Here are a few common reasons why you might need to stop ACH payments:

• Unauthorized ACH charges: If a payment went through without your consent, it’s considered unauthorized and could be a sign of fraud
• Payment errors: Overcharges, duplicate invoice payments, or incorrect amounts can result from system errors or manual entry mistakes
• Incorrect account details: If a payment went to the wrong account due to incorrect routing numbers or account numbers, the bank may be able to assign an ACH trace number to track and recover the funds if the mistake is caught early enough
• Changes to an agreement: If you cancel a service, end a subscription, or adjust a payment schedule, you’ll need to stop any associated recurring ACH withdrawals before they’re processed

These are just a few examples. The steps for stopping an ACH payment will be the same no matter why you need to do it.

How to request an ACH reversal

You can only cancel an ACH payment before the transaction is processed. Once it's gone through and been debited from your account, you may be able to request an ACH reversal. Here's what to do:

Step 1: Check whether you meet the reversal criteria

Nacha, the organization that oversees the ACH network, allows reversals only in certain circumstances. Your ACH payment can qualify for reversal in these four specific cases:

• It was processed twice, resulting in a duplicate payment
• The amount was incorrect
• It went to the wrong account
• It arrived on the wrong date

If your payment meets any of these conditions, you can submit a reversal request.

Step 2: Contact the receiving party

Many businesses have established procedures for handling payment reversals. In fact, they may be able to process your request more quickly than going through banking channels.

When contacting the receiving party, be prepared to provide specific information about your payment. This typically includes:

• Transaction date
• Payment amount
• The account information you used for the payment
• Any reference or confirmation numbers associated with the transaction

You should also explain the reason for your reversal request, whether it's due to an error, duplicate payment, or unauthorized transaction.

The response time and willingness to process reversals can vary quite a bit between different businesses. Some may handle your request within a few business days, while others might have longer processing times or specific policies about when they allow reversals. Be patient but persistent, and always request written confirmation of any reversal agreement.

Step 3: Notify your bank ASAP

After contacting the receiving party, inform your bank about the reversal request. Timing is crucial with ACH reversals because Nacha requires them to occur within 5 business days of the transaction's settlement date.

Your bank will likely require you to share detailed documentation about the transaction in question. This may include:

• A written statement explaining the circumstances
• Copies of any correspondence with the receiving party
• Proof of the original transaction

Some banks offer online forms for reversal requests, while others may require you to visit a branch in person or submit documentation by mail.

Be aware that most banks charge a fee for processing ACH reversals, which can vary depending on the financial institution. You'll typically have to pay the fee regardless of whether the reversal is successful, so factor this cost into your decision-making process. Ask your bank for specific information about their fees.

If the funds have already been accessed, retrieval becomes more complex and may require legal action.

Monitor your account after taking action

Once you've requested a stop payment or reversal, keep an eye on your account activity to make sure your request went through correctly. Banks can make mistakes, and payment processors might attempt to push through transactions despite your stop payment order.

Set up account alerts through your bank's web or mobile app. These alerts will notify you the moment any ACH transaction hits your account. Also, if you're not doing so already, make it a habit to review your bank statements regularly. Look specifically for any transactions from the merchant you intended to block.

If you spot the payment going through despite your stop payment request, contact your bank immediately to report the issue. Document everything. Save screenshots of the transaction, keep records of your original stop payment request, and note when you discovered the problem.

Should your bank be unresponsive, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) online or by phone. Before it goes that far, you can also escalate within your bank by asking to speak with a supervisor who might have more authority to reverse the transaction.

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What to do about unauthorized ACH charges or recurring withdrawals

Dealing with unauthorized ACH charges or unwanted recurring payments requires a different approach than standard stop payments. These situations often involve fraud or merchants who continue charging you after you've canceled their services.

Start by disputing the unauthorized charge directly with your bank. Banks are required to investigate unauthorized electronic transfers and typically provide provisional credit while they review your case. You'll need to explain why the charge was unauthorized and provide any supporting documentation.

For recurring automatic payments that you previously authorized but now want to stop, contact the merchant first. Send them a written notice revoking your authorization for future ACH debits. Keep copies and send your revocation via certified mail or email with read receipts to create a paper trail.

If the merchant continues charging you after you’ve taken these steps, inform your bank that you've withdrawn ACH authorization for future payments. Under the Electronic Fund Transfer Act, you have the right to stop preauthorized payments even if you originally agreed to them, as long as you make the request within 3 days of the scheduled transfer.

How online and offline cancellations affect ACH stop payment requests

Making a request to stop ACH payments online via your bank’s website or app may be your first instinct since that’s usually the most convenient way to do things. But you might wonder whether it's more beneficial to make your cancellation request via phone or in person at a branch.

Let’s look at a few ways online and offline ACH cancellation requests differ so you can choose the right method for your situation:

Here are some factors to consider when deciding whether online or offline ACH cancellation would be a better method for your scenario:

• Urgency: Online methods are generally more efficient if you need to cancel an ACH payment immediately
• Complexity: Consider using offline methods and personalized assistance for complicated situations, such as unauthorized transactions or disputes
• Bank policies: Always check your bank's specific policies regarding cancellation methods for ACH payments. Some institutions may have different procedures or requirements.

Whether you choose to stop ACH payments online or offline, you’ll follow the same three-step process described earlier and will need to provide the same information with your request.

Make your ACH payments with Ramp

ACH payments are a secure, convenient way for your accounts payable team to pay vendor, but mistakes happen. Knowing when and how to stop ACH payments, as well as which methods to use in what circumstances, can make the process go much more smoothly.

If you automate your AP process with Ramp, you’ll always stay informed about your ACH payment statuses, ensuring fast transactions. That’s because Ramp Bill Pay allows you to:

• Receive error alerts: Automated 2-way and 3-way matching catches errors such as overbilling and duplicate invoices
• Send same-day ACH: You’ll have the option to make same-day ACH transfers when time is of the essence
• Reduce data entry time: Scan or upload documents like invoices, purchase orders, and vendor onboarding information rather than manually entering them
• Secure your payments: All ACH payments made through Ramp are compliant with Nacha standards
• Automate approval workflows: You’ll be able to set automated approval chains to prevent the confusion and slowdowns of manual approvals

How else could automating your AP with Ramp Bill Pay save your business time and money? Check out a demo and find out.

This post includes general information about ACH payments. For help with ACH functionality specific to Ramp, visit Ramp Support for more details.