Financial Institution Returns

When Mazooma receives a return notification from the bank, we send a return notification to the event notification URL specified by the Merchant during the system integration. The Merchant system parses the data in the notification and processes the FI return internally.

Transactions may be returned from a bank for several reasons. For more information, see Return codes.

Return notification verification

Next, the return (event) notification needs to be confirmed by the Merchant in the same way that payment notifications are. That is, the Merchant system must send the verification request back to Mazooma and echo an exact copy of the original event notification. The copy must be a string that matches the notification message exactly (byte-to-byte) and not be a reconstructed set of parameters, even with the same set of parameters and values.

After parsing and verifying the return notification, the Merchant forwards the FI return information internally for processing.

For more information, see About notifications.

Representment

All returns, except those with return codes R01 (insufficient funds) or R09 (uncollected funds), are final and will not be represented. Whether the return will be represented is indicated in the nextAction field of the return notification. For returns that are not represented, Mazooma will deduct the returned transaction amount from the Merchant’s Instant Bank Transfer account balance.

However, if the return code is R01 (insufficient funds) or R09 (uncollected funds), Mazooma represents the amount of those transactions up to two additional times and sends a return notification for each return. Funds are not deducted from the Merchant’s account balance unless we are unable to retrieve the funds from the Consumer. At this point, nextAction=D (disposed) is passed in the return notification.

The return notification also includes the nextActionDate, which indicates the date when the payment will be represented to the bank.

For a complete list of return codes, see ACH Return Codes.

Representment process

After receiving the first return of the original transaction, Mazooma:

  1. Sends a notification to the Merchant with nextAction=R, indicating that the payment will be represented. The date when the payment will be represented is three business days after the return notification and is specified in the nextActionDate.
  2. Re-submits the payment to the bank (first representment) on the specified date. We recommend that the Merchant wait five business days to confirm if the representment was successful. If there is no return from the first representment, then the payment can be considered successfully processed.

If there is a return of the first representment, Mazooma:

  1. Sends a notification to the Merchant with nextAction=R, indicating that the payment will be represented. The payment will be represented on the 15th or the last day of the month, whichever comes first, and is specified in nextActionDate.
  2. Resubmits the payment to the bank (second representment) on the date indicated in the notification. We recommend that the Merchant wait for five business days to confirm if the representment was successful. If there is no return from the second representment, then the payment can be considered successfully processed.

If there is a return of the second representment, then the payment is considered as Disposed (final status) and Mazooma sends a notification to the Merchant with the final status nextAction=D.

Risk management

Even with Mazooma’s comprehensive risk management controls (see Return and Risk Management), returns are inevitable. We urge you to carefully review our recommendations and implement your own risk management tools to manage returns. Merchants are responsible for following up with Consumers to collect funds in the event of returned transactions.

Mazooma has several recommendations that the Merchant can implement to manage returned transactions and mitigate risk, fraud, and returns. Review this section carefully.

We recommend that returns are handled based on the return code. For example, in the case of R16 (account frozen) returns, the Merchant needs to contact the Consumer to ask them to contact their bank to reactivate the account. A best practice to receive notice is to request that the Consumer fax or email a statement from their bank confirming that the bank account is active before allowing the Consumer to attempt another transaction. See the recommended actions by return code.

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