> ## Documentation Index
> Fetch the complete documentation index at: https://docs.dimepayments.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Why ACH Refunds Are Held for 7 Days

> Understanding the ACH refund hold policy and how it protects you as a merchant.

## 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.