ACH Payments Return Monitoring

How do we calculate your reversal Rate rate?

Unauthorized & Administrative ACH return rate calculation:

The number of returns divided by the number of total debits for the preceding 60 days or two calendar months

For example:

  • Month 1: 3 unauthorized returns. Month 2: 4 unauthorized returns
  • Month 1: 742 total debits. Month 2: 975 total debits
  • Unauthorized Return Rate: (3+4) / (742+975) = 0.41%

Overall ACH return rate calculation

When calculating the Overall ACH Return rate, Circle takes out the Representment-affiliated transactions records, such as Representment origination and Representment returns.
The total number of returns divided by the number of total debits for the preceding 60 days or two calendar months (exclude Representment from both numerator and denominator)

What rate is considered excessive?

According to Nacha, ACH debit returns must stay below specific thresholds:

  • Administrative Returns must stay below 3 percent. This percentage is calculated based on ACH debit returns for the preceding 60 days.

  • Unauthorized Returns must stay below 0.5 percent. This percentage is calculated based on ACH debit returns for the preceding 60 days.

  • Overall Returns must stay below 15 percent. This percentage is calculated based on ACH debit returns for the preceding 60 days.

ACH Reversal Action Programs

Warning

Should your business’s return rate exceed any of the following thresholds, you will be place in Circle’s Early Warning Monitoring Program:

  • Administrative Returns exceeds 1.5%.
  • Unauthorized Returns exceeds 0.25%.
  • Overall Returns exceeds 7.5%.

Warning Threshold Procedures

  • Circle will notify the merchant they have entered Circle’s Early Warning Monitoring Program.
  • Circle will analyse the merchant and their problematic returns and will pass any findings to the merchant.
  • Circle may request confirmation of authorization for transactions.
  • Circle may request a writeup from the merchant to clarify what fraud safeguards are in place now, and your ongoing monitoring & surveillance procedures.

Standard

Should your business’s return rate exceed any of the following thresholds, you will be place in Circle’s Standard Monitoring Program:

  • Administrative Returns exceeds 3%.
  • Unauthorized Returns exceeds 0.5%.
  • Overall Returns exceeds 15%.
  • Circle’s Standard Monitoring Program requires a minimum of 50 returns in any category.

Standard Threshold Procedures

  • Circle will notify the merchant they have entered Circle’s Standard Monitoring Program.
  • Circle will analyse the merchant and their problematic returns and will pass any findings to the merchant.
  • Circle will schedule a call with the merchant to discuss findings, and depending on the return rate bucket, we may request the merchant to alter the due diligence process at the time of payment.
  • Circle may request a writeup from the merchant to clarify what fraud safeguards are in place now, and your ongoing monitoring & surveillance procedures.
  • Circle may request a most recent version of the customer terms and conditions, and we want to make sure that the verbiage about the refunding process is in place and clear.
  • Circle may request an action plan that addresses the strategy to reduce the return rate.
  • Circle may impose limitations on the account of the merchant.
  • Circle may intervene and deny “high risk” transactions of the merchant.
  • Circle may request that the merchant integrates with Plaid’s Identity endpoint to reduce the return rate.
  • Circle will communicate clearly and regularly with Silvergate

Excessive

Should your business’s return rate exceed any of the following thresholds, you will be place in Circle’s Excessive Monitoring Program:

  • Administrative Returns exceeds 3% for an entire rolling 60 period.
  • Unauthorized Returns 0.5% for an entire rolling 60 period.
  • Overall Returns: 15% for an entire rolling 60 period.

Circle’s Excessive Monitoring Program requires that the merchant has been in the “Standard Program” for at least 30 days.

Excessive Threshold Procedures

  • Circle will notify the merchant they have entered Circle’s Excessive Monitoring Program.
  • Circle will immediately schedule a call with the merchant to discuss next steps.
  • Circle will request a writeup from the merchant to clarify what actions will be taken to reduce returns ASAP.
  • Circle will impose limitations on the account of the merchant.
  • Circle will intervene and deny “high risk” transactions of the merchant.
  • Circle will provide the merchant with a definitive period of time to demonstrate clear improvement with applicable return rate.
  • Circle may suspend the merchant from processing.
  • Circle may terminate the relationship with the merchant.
  • Circle will communicate clearly and regularly with Silvergate