Skip to main content

​
The short answer

Dime Payments does not process refunds on ACH transactions until 7 days have passed since the original payment. This policy exists to protect you from a costly situation that is unique to ACH — and it is worth understanding why.

​
How ACH is different from credit cards

When a customer pays by credit card, the funds are authorized and verified in real time. ACH bank transfers work differently — they are processed in batches and can take anywhere from 3 to 10 business days to fully settle. More importantly, a bank can reject an ACH transaction after the fact if the customer’s account has insufficient funds, is closed, or the customer disputes the transfer. This rejection is called an ACH return — the bank equivalent of a bounced check.

​
The problem with refunding too early

Here is what happens if a refund is issued before an ACH payment has cleared:
  1. Monday — a customer pays you $100 via ACH. The money has not arrived in your account yet — it is in transit.
  2. Wednesday — you issue the customer a $100 refund. That refund comes out of your account immediately.
  3. Friday — the customer’s bank rejects the original payment due to insufficient funds. The $100 never actually arrives, and you are also hit with a $25 ACH return fee.
The result: you are out $225. You lost the original $100 payment, paid out $100 in a refund for money you never received, and absorbed a $25 return fee. Effectively, you paid the customer $100 to take your goods or services.

​
Why 7 days

The 7-day hold gives enough time for the ACH transaction to either settle successfully or return. Once 7 days have passed, the risk of a return is substantially lower and we can process the refund with confidence that the original funds are real.

​
What to tell your customers

If a customer requests an ACH refund before 7 days have passed, let them know:
“ACH bank transfers take several business days to fully clear. To protect against returned payments, we hold ACH refunds for 7 days from the original transaction date. Your refund will be processed on [date].”
Most customers understand once the timeline is explained. It is the same reason a bank holds a check before making funds available.

​
Need an exception?

In certain circumstances, a refund override is available. Contact your Dime Payments representative directly if you have a situation that requires early processing — we will review it case by case.