A Second Chance: Understanding ACH Reversals 

August 10, 2026 / Source: Nacha

An ACH reversal is an ACH entry that allows an Originator to correct certain payment errors, and can be sent using Same Day or standard ACH. Reversals must comply with specific Nacha Rules and time frames and may only be used to correct genuine sender errors. Understanding when reversals are permitted, acting quickly, and maintaining strong payment controls can help organizations resolve mistakes efficiently and remain compliant. 

• A reversal versus a return: A reversal corrects an ACH payment error made by the sender of the payment. A return is an ACH payment that is sent back because it could not be accepted by the receiving financial institution.  

• The right time to use a reversal: A reversal may be used only to correct an erroneous entry, including a duplicate payment, incorrect amount, payment sent on the wrong date, or payment sent to an unintended account. The error must originate with the sender. International ACH Transactions (IATs) cannot be reversed. 

• What reversals cannot be used for: A reversal cannot be used to reverse a fraudulent payment. For example, if the payment goes through with an account number that the Originator deliberately entered, and after the fact the Originator realized it to be a potential fraud perpetrator’s account, the Originator may not use a reversal to pull back the funds. Consult with your financial institution or third party for remedies in these situations. 

• Timing matters: A reversal cannot settle before the original transaction. The original entry must be settled first or at the same time, although Same Day ACH may be used for the reversal when appropriate. Reversals must be transmitted within five banking days of the original settlement date. 

• Reversing File vs. Reversing Entry: Reversing one entry requires the exact information from the original transaction to be used upon transmission. When reversing an entire file, not only does all the exact information need to be present, but a correcting file for each file that was reversed needs to be sent as well.   

• Required information that needs to be present: Reversals must include “REVERSAL” in the Company Entry Description field and contain the original SEC Code, Company/Originator Identification, and transaction amount. The reversal amount must match the original transaction. 

• Understanding the process: Check with your financial institution or vendor. Some financial institutions and third parties require that their organizations send reversals on behalf of their clients, as a risk mitigant.  

• No funds available: If a reversal transaction is sent and funds are no longer available in the receiving/paying account, then the reversal transaction should be returned and the collection of funds for the sender has not been completed.  

• Not every mistake qualifies for a reversal: Reversals are not a quick fix for every payment issue. They cannot be used when the sender lacks proper authorization from the original transaction, a customer disputes a legitimate payment, the sender simply wants to cancel a payment, or the reason does not fall within the permissible error categories outlined in the Nacha Operating Rules. 

The reversal process can be helpful when needed. However, organizations can implement internal controls to prevent the need for reversals. These safeguards include dual approval of ACH files, pre-transmission validation, payroll and vendor payment reviews, duplicate payment detection, and other fraud monitoring controls.  

ACH reversals are an effective tool for correcting genuine payment errors, but they are not a “do-over” button. Understanding the Nacha Rules, acting promptly, and maintaining strong controls can help organizations resolve mistakes efficiently and remain compliant. 

Terms to Know:

Correcting File: A File that corrects the Entries contained in an Erroneous File.  

Reversing Entry: A transaction sent by a sender to correct an erroneous payment which falls under the specifications outlined in the Nacha Operating Rules. 

Reversing File: A file that reverses an erroneous file of payments under the specifications outlined in the Nacha Operating Rules.  

Settlement Date: the processing date of the ACH payment—the day the transaction is intended to post and funds are exchanged between financial institutions. 

Organizations should have internal expertise to understand rights and responsibilities for when something goes wrong. Nacha offers the Accredited ACH Professional (AAP) certification to assist your organization’s understanding with Reversals and other Nacha Operating Rules.