Returns and Adjustments

The Check21.com Gateway is bi-directional - transmitting EFT (ACH and PAD) and checks to a client's financial institution, but also retrieving returns, and occasionally adjustments from the institution.

Returns occur when the payment is rejected by the issuing institution (the institution belonging to your customer, vendor, etc. - not your own institution). The most common reasons for a rejection are insufficient funds, account closed, or account cannot be located (Unable to Locate).

Adjustments are similar to returns with the exception that the institution may return partial amounts of payments. Adjustments only occur with check transactions. The most common adjustment is "encoding error", where the amount of the check does not match the amount entered by the user during the scanning/capture process. This may result in a credit or debit to a client's bank account. For example:

The user enters (into the UI) the amount of a check as $50 but the physical (legal and/or courtesy) check amount is $500. In this case, the financial institution may "credit" the account $450.00.
The user enters (into the UI) the amount of a check as $500 but the physical (legal and/or courtesy) check amount is $50. In this case, the financial institution may "debit" the account for $450.

Other adjustment types occur for image quality issues (full amount is rejected) or duplicate presentment (full amount is rejected).

In the case of Adjustments, the Check21.com Gateway will return the check as a "Deposit Adjustment". When the item is returned as such, the value of the "Returned Amount" field will dictate the type.

If the Return Amount is equal to $0.00, the item adjusted was rejected due to "image quality". You can expect the full amount of the check to be debited from the bank account.
If the Return Amount is greater than $0.00, the item adjusted was rejected due to "error encoding". The Return Amount is indicative of the legal/courtesy amount present on the physical item. You can expect a partial credit or debit within your bank account. Using Example 1 above, the Return Amount value would return "500.00" indicative of a $450.00 credit (Return Amount - Original Payment Amount = Adjusted Amount / $500 - $50 = $450 Credit). Using Example 2 above, the Return Amount value would return "50.00" indicative of a $450 debit (Return Amount - Original Payment Amount = Adjusted Amount / $50 - $500 = -$450 Debit).

Although considered adjustments, "Duplicate Presentments" would return as "Duplicate Entry" not "Deposit Adjustment" and have a $0.00 value for the Return Amount.

For all other returns, the Check21.com Gateway will utilize the corresponding return code provided by the bank. A zero dollar value will appear in the Return Amount field.

Rejections

Although sometimes confused with Returns, Rejections are items that were never submitted to a client's financial institution, but instead rejected by the Check21.com Gateway. The Gateway rejects the following transactions:

Duplicate Payments - When the Order ID, Amount, Routing, and Account are the same, or when submitting Checks, the Order ID, Amount, and MICR line.
Hard Returns - When a payment is being drawn on an account Check21.com has identified as Closed (Returned "Account Closed") or non-existent (Returned "Unable to Locate").
Consecutive NSF's - When a payment is being drawn on an account Check21.com has identified as having a total of 4 consecutive NSF's (Returned "Non-Sufficient Funds").
Consecutive Chargebacks - When a payment is being drawn on an account Check21.com has identified as having a total of 4 consecutive Chargebacks (Returned "Not Authorized", "Stop Payment", or "Warranty Breach").

Please note that Check21.com maintains a whitelist which allows for the bypassing of the rules stated above. That whitelist primarily incorporates bill pay checks whose routing number and account number is used widely.

Next Steps

To use the Check21.com Gateway via API, please speak with your Check21.com Account Representative or contact Sales to obtain an API Key. Once in possession of the key, please see the API reference section, labeled Submission of ACH Credits, Debits or Check Transactions.. You can also view Reconciliation of Accounting to understand the accounting reconciliation process thoroughly.