Payment Reason Codes, R-Transactions, R-Messages 14

Most corporates focus on getting their payments to the banks in a controlled, secure and efficient manner. Once at the bank, corporates want to ensure that their payments STP – Straight Through Process. The objective is firmly on the connectivity from the corporate to the bank, and then ensuring that the payments data and format is correct. In and amongst this, we forget that their is a bank to corporate process which tells us the status of the submitted payments. This is typically in the form of a Payment Status Report (or PAIN.002) and the bank statement (MT940, BAI2 or other). This is really important. You need to understand the formats and the details of the information that is being transmitted to you. Typically if you see the debit/credit on the statement for the intended value, there is a sigh of relief. If you don’t see the debit/credit you need to understand whats has gone wrong. That is where Reason Codes, and the R-transactions come in…..

What is a Reason / Return Code?

  • Reason or Return code is the SEPA way of telling us why our payment failed
  • Reason code is what we traditionally refer to as the reason for rejection
  • There is a standard set of reason codes that should be used by all banks / countries to indicate the reason for payment failure

What are R-Transactions?

  • These are similar to the above, but specific to SEPA direct debit collections
  • For direct debit collections, these ‘R’ codes indicate that the collection cannot happen due to one of the following:
    • Refund, Refusal, Reject, Returns, Reversals, Request for cancellation, Revocation
    • Note: they all start with R, hence the name R-transactions…Clever, eh? :)

Ok, so how will this help me?

  • When you review the returned credit/debit entry on your bank statement, you will see a 4 digit Return Code
  • You will also see these codes on the PAIN.002 (Payment Status file)
  • Take a look at some of the most commonly used Return Codes at the end of this post, and cross reference them on the returned item on your bank statement / PAIN.002
  • With this information you will understand why the return/rejection has happened
  • Be aware that some banks will use the numeric value, others will use the alpha-numeric value
  • The below only indicates some return codes, a more comprehensive list can be found here

Alright, thats simple enough…

  • Not quite! Not all banks are following the above standards. If they’re not, you need to chase them up and get them to fix it. Otherwise you might see a generic return message such as “no reason” which doesnt help you or your SEPA implementation
  • You may need to speak with both the European SEPA team at the bank and your local contacts at the bank to get this fixed. Some local / in-country banks may have local return code rules in place which override the banks European SEPA solution

Please share this with your cash management team, and payments team. They will love you!!!!

SEPAReason Code SEPA Statement Reason Code Description
AC01 901 Incorrect Account Number
AC04 902 Closed Account Number
AC06 903 Blocked Account
AG01 904 Payment Type not allowed
AG02 905 Invalid Bank Operation Code
AM04 906 Insufficient Funds
AM05 907 Duplicate Collection / Entry
BE04 908 Missing Creditor Address
MD01 909 No Valid Mandate
MD02 910 Missing Mandatory Inform
FF01 911 Invalid File Format
MD06 912 Refund Request By End Customer
MD07 913 End Customer Deceased
MS02 914 Not Specified Reason by Customer
RC01 915 Invalid BIC
TM01 916 Cut-off Time
SL01 918 Specific Service offered debtor bank
FOCR 919 Return due to a Recall
DUPL 920 Duplicate Payment
TECH 921 Payment in Error (technical reason)
FRAD 922 Fraud
AGNT 923 Incorrect Agent
CURR 924 Incorrect Currency
CUST 925 Recall by Customer
CUTA 926 Recall due to Investigation Request
UPAY 927 Undue Payment
BE05 928 Unrecognised Initiating Party
AC13 930 Invalid Debtor Account Type
FF05 931 Invalid Local Instrument Code
DNOR 932 Debtor Bank is not Registered
CNOR 933 Creditor Bank is not Registered
RR01-04 917 Regulatory Reason
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14 thoughts on “Payment Reason Codes, R-Transactions, R-Messages

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  5. Reply Max Sep 4, 2015 12:28 pm

    Very nice doc…but which is the file structure used for send back the rejected SDD ? PAIN.002 , isn’t it? I still don’t understand where I’ll get back SDD rejection : PAIN.002 or bank statment?
    someon help me
    Max

  6. Reply Veera V Krishna Jan 7, 2016 1:45 pm

    @Max:
    Incase you don’t know yet then this is for you,

    Type of R-message – xml Format
    cancellation – Camt056
    Reversal – PACS007
    Refusal, Reject – Pacs002
    Return, Refund – Pacs004

    If it is settled then you can see rTransaction in the account statement for else depends on the bank how they do.

  7. Reply Sundar Mar 30, 2017 11:02 am

    I wish to know whether EBA does any validation on this transaction error codes when it is being wrongly sent for other type of message?

    Example: ARDT transaction error code being sent for a PACS004 reject message where for pacs004, this is a invalid code.

    Any idea?

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  13. Reply Eddie Gaddis Jul 24, 2017 12:41 pm

    I dont see the Code R34,Here the cope from my DTA

    Bank Name: New York (Primary Bank for Purchases and Payments)
    Routing Number: 021051452
    Account Number: *****4846
    Name(s) on Account: EDDIE LANE GADDIS
    Account Type: Savings
    Return Code: R34 – Limited Participation

  14. Reply Monica Anderson Jul 28, 2017 11:15 am

    Assuming that everything with the process goes well, how long could it possibly take to access funds in these accounts? Additionally, do I need to complete the ucc1 financing statement to access these funds? And lastly for now, what are the legal risks in acquiring these accounts?

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