An ACH reversal is an entry an originator or its bank sends to correct an erroneous ACH entry. Nacha's rules allow it only for set reasons: a duplicate entry, the wrong receiver, the wrong amount, certain payroll credits after termination or separation, and since June 30, 2021, a debit dated earlier than intended or a credit dated later than intended. The reversal must reach the receiver's bank within 5 banking days after the original entry settled. A reversal for any other reason, such as a missed funding, is improper and can be returned by the receiver's bank.
What is an ACH reversal?
A reversal is a new ACH entry that undoes an earlier one sent in error. The originator, meaning the business that sent the entry, or its bank (the ODFI) sends it. The receiver's bank (the RDFI) gets it like any other entry. Nacha, which writes the ACH network's rules, calls it a Reversing Entry.
When is a reversal allowed?
Only for the reasons Nacha lists. Its rule page names the existing reasons and the one added in 2021:
| Reason | Example |
|---|---|
| Duplicate entry | The same debit was sent twice |
| Incorrect receiver | The debit went to the wrong customer's account |
| Incorrect dollar amount | $11,083.30 was debited instead of $1,108.33 |
| Certain PPD credits after termination or separation from employment | A payroll credit sent after someone left |
| Wrong date (since June 30, 2021) | A debit dated earlier than intended, or a credit dated later than intended |
How long do you have?
Five banking days. Nacha says an originator or ODFI "must still transmit a Reversal in such time that it is made available to the RDFI within 5 banking days following the Settlement Date of the Erroneous Entry." The 2021 rule changed the reasons, not the timing.
How does a reversal have to be formatted?
Nacha's rules set these requirements:
- The word REVERSAL, in capitals, in the Company/Entry Description field.
- The Standard Entry Class code, Company Identification and amount must match the original entry.
- The originator's name must identify the same originator. Small variations for accounting or tracking are allowed if the name stays readily recognizable to the receiver.
- Other fields can change only as needed to process the reversal.
What makes a reversal improper?
Nacha says a reversal is improper if it is sent:
- For any reason other than those the rules allow.
- Because an originator or third-party sender failed to fund the original entry.
- After the permitted time frame.
The receiver's bank can return an improper reversal. For a consumer account it uses return code R11, and must get the consumer's Written Statement of Unauthorized Debit first. That return must reach the ODFI by the opening of business on the banking day after the 60th calendar day following settlement. For a business account, or when the bank finds the problem itself, it uses R17, and the return must reach the ODFI by the opening of business on the second banking day after settlement. An originator that sends improper reversals may also face Nacha enforcement.
Is a reversal the same as a refund?
No. A refund is something you choose to give a customer, for any reason your policy allows. A reversal corrects an error in the entry itself and must fit Nacha's reasons and window. Stripe's ACH docs say Stripe sends ACH refunds "as a separate credit to the customer's bank account" and that "they're never issued as a reversal."
Is a reversal the same as a return?
No. A return comes from the receiver's bank, for reasons like insufficient funds or a closed account. A reversal comes from the sender. See ACH return codes.
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.