R01 (NSF) Returns

Q: If Paynote uses Plaid to verify bank accounts and check balances, why can we still receive R01 (Insufficient Funds) returns?

A: Plaid’s bank verification and balance check significantly reduce the chance of insufficient-funds failures, but they don’t eliminate it entirely.

Plaid’s balance check reflects a single moment in time, when a debit is initiated.
If Plaid reports “insufficient funds,” Paynote blocks the transaction to prevent an obvious failed debit. The transaction status is "Declined".

It's possible for R01 returns to occur even after a “passed” Plaid balance check. Common reasons include:

Timing gap: Funds were available at the time of the Plaid check, when the debit was submitted but other debits, withdrawals, or card transactions hit the account before the debit was exported, leaving insufficient funds at export time. ACH debit transfer schedules can be seen here.
Pending or held transactions: Holds may not be fully reflected in the reported “available” balance. When those clear, they can consume funds needed for your debit.
Overdraft limits & internal bank rules: Some banks allow temporary overdrafts or have internal limits; when those limits are reached, your debit can be rejected for R01 even if the earlier balance appeared sufficient.

In short: Plaid reduces R01 risk by blocking clearly underfunded attempts up front, but it cannot guarantee that the account will still have funds when the bank exports the ACH debit. R01 is always ultimately determined by the customer’s bank based on the account’s state at the time of export.

Q: What can merchants do to further reduce R01 returns when using Paynote?

A: To tighten your risk controls around R01:

Set clear expectations with customers
Let customers know when funds will be debited and that they must keep sufficient funds available in the linked account through that window.
Leverage Paynote’s risk monitoring, settings, and Plaid Signal
Use internal limits, velocity checks, and return-rate monitoring together with Plaid Signal’s risk insights to flag customers and transactions that are more likely to result in R01 returns, and adjust your acceptance criteria.
Note: Plaid Signal is not enabled by default in Paynote. If you’d like to use Signal-based risk scoring, please contact our team (or your Paynote rep).
Use retry rules thoughtfully
For legitimate customers who occasionally run short on funds, you may choose to retry an R01 once after notifying them to ensure funds are available, in line with NACHA guidance and your risk tolerance.