NAFCU letter to NACHA in response to request for comment on clarification and use of R03 and R04

September 19, 2013

Maribel Bondoc
Manager, Network Rules
NACHA- The Electronic Payments Association
13450 Sunrise Valley Drive, Suite 100
Herndon, Virginia 20171
RE:      Request for Comment—Clarification and Use of R03 and R04

Dear Ms. Bondoc:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association  that  exclusively  represents  federal  credit  unions,  I write to you in response to the request for comment issued by NACHA- The Electronic Payments Association (NACHA) to amend the NACHA Operating Rules to clarify ACH participants’ use of certain return reason codes.

The proposed rule would amend the NACHA Operating Rules to clarify the distinctions between Return Reason Codes R03 (No Account/Unable to Locate Account) and R04 (Invalid Account Number Structure). NACHA believes that these clarifications would eliminate any ambiguities that are currently associated with the use of these codes and improve processing efficiency.

NAFCU generally supports the proposed changes. We agree that the clarifications would facilitate better understanding of when to use which code and reduce inefficiency and confusion on both ends.

NAFCU would like to take this opportunity to address the time frame requirements under R03. A repurposed R03 should not be subject to the same time frame as an administrative return because (a) there is no requirement to match name and account number; and (b) a Receiving Depository Financial Institution will not always be made aware of it within a two-day time frame. Credit unions will return an entry once they are aware that there is a name mismatch and there has been a fraudulent initiation. However, this typically occurs later than the prescribed time-frame for R03 and credit unions must use a different Return Code. NACHA should amend its rules or guidance to indicate that credit unions may use R03 beyond its current two-day time frame.

NAFCU appreciates the opportunity to provide our comments. Should you have any questions or concerns, please feel free to contact me at or (703) 842-2272.


Angela Meyster
Regulatory Affairs Counsel

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