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Ready or Not, Here Comes Same-Day ACH


This is the first of a two-part series on Same-Day ACH. The first article looks at how the rules will change, and the next article will look more specifically at how the new rules will impact banks.

What a difference a day makes, especially if you’re talking about the movement of money. According to the Eighth Annual Billing Household Survey from Fiserv, more than 80% of people polled say real-time or same-day processing is important when paying bills.

Starting in September money will indeed move faster when Same-day ACH becomes a reality. You’ll be able to initiate payments faster under the new process. If your bank is the originator, you’ll be able to enter a bill pay authorization and have it credited later that same day. For example, if a bill is due on Friday you could initiate a Same-day ACH transaction Friday and still make the payment on time.

“Right now, ACH transactions post by effective date. The NACHA rule provides a two-day lead time for credits and one day for debits. The Same-day rule provides a significant improvement to make funds available quickly,” says Susan Meyer, senior strategy product manager for Fiserv.

The Same-day rule provides a significant improvement to make funds available quickly.

There’s little doubt about that. Currently, say you want to pay a bill due Friday via ACH and initiates the payment on Thursday night at 10 p.m., you may have missed your bank’s window for submitting a conventional ACH payment for settlement the next day. “With the intervening weekend, the payment wouldn’t be delivered until Monday,” explains Steve Kenneally, vice president of payments and cybersecurity policy at the American Bankers Association. “Transactions initiated using Same-day ACH in time to be submitted to your bank in time to meet the 10:30 a.m. or 3 p.m. transmission window would be delivered on time on Friday,” he says.

Meyer puts it simply, “Life moves fast, and people want their money to be available when and where they need it. People will benefit from enhanced abilities such as hourly and emergency payrolls, faster bill pay settlement and business to business payments or expedited, business-to-consumer payments.”

Change is coming in September, but it will be a process. The Same-day ACH will first apply to credit transactions only. Debit transactions will be allowed in September of 2017, and six months after that there will be other changes, like the guarantee of availability of funds by 5 p.m. local time, says Rick Burke, head of corporate products and services at TD Bank.

For most people Same-day ACH is a good thing. “They’ll get their money sooner, although it’s not real-time, this will make a difference for people,” says Burke.

Not a panacea

With change comes pain. The NACHA rule establishes a limit of $25,000 per transaction, international transactions are also prohibited, says Kenneally. While many ACH transactions are well below $25,000, it is an issue for some.

Financial institutions in particular will feel some pain. “This is going to increase by two or three times the amount of work they do,” says Burke.

All financial institutions will have to upgrade their system to be able to receive Same-day ACH transaction.

All financial institutions will have to upgrade their system to be able to receive Same-day ACH transaction. “Receiving these transactions is not an option and there will be additional costs to ensure that customers will receive this benefit. Additionally, if a financial institution decides to originate these transactions for its clients, it may have additional technical and procedural upgrades,” says Kenneally.

To be compliant, banks will need to gain greater management and oversight on their same-day activity. “The rule change impacts upstream and downstream systems and operational procedures from the front to back office. Financial institutions will have to train internal employees, as well as customer – especially commercial originators,” says Meyer.

Despite the momentum for Same-day ACH, Kenneally isn’t sure that it will become a standard practice, but it will become a recognized alternative to conventional ACH. He says NACHA predicts the total number of Same-day ACH transactions will increase from 213 million in 2017 to 1.4 billion in 2017. “It’s important to note that total ACH volume in 2014 was 23 billion, so even NACHA isn’t predicting that it will become prevalent.”

The bottom line, says Kenneally, “Same-day ACH may not be a huge leap to faster payments, but it will the first to take a step in that direction and it is using road tested technology that financial institutions trust and that consumers are practiced in.”

Anonymous   |     |   Comment #1
This is a great improvement.  Fidelity used to accept an ACH from my bank, but wouldn't make the funds available for nearly a week.  In other words, they treated the ACH the same as if I deposited a personal check at one of their offices and they had to wait till it cleared. 

 I complained vehemently and now they post an ACH the next day, as available.  Under this rule my funds will be available even 1 day sooner.  A victory for the consumer.
Anonymous   |     |   Comment #2
In Europe the same day transfer was in effect 30 years ago, today in Europe the ACH transfers are instantaneous, long way for USA to catch up on the present money transfer.
paoli2   |     |   Comment #3
Will this allow us not to have to pay for wire transfers when we have out of town CDs maturing or will it affect that in any way?  Thanks.
Anonymous   |     |   Comment #5
Not necessarily, some financial institutions place a limit on the amount of money that can be transferred by ACH at any one time.
me1004   |     |   Comment #8
You might not have to pay for the wire transfer, but I have not heard of any regulation barring charges on ACH transfers -- I would expect the banks will charge nearly as much as a wire transfer if you want same-day transfer.
Anonymous   |     |   Comment #14
USA is way back in money transfers, In Europe and Australia and Hong Kong area use mostly ACH, there is wire transfer option but only to send the money to USA, there is also S.W.I.F.T a Belgium base company that can transfer any amount to anywhere on earth very cheaply like $5-10 processing fee in just few hours.
USA banks are selfish and greedy entities and all that matter is profit at all cost and when you add the regulations from Federal level and State level, they only spend their time on innovative accounting to satisfy the regulations instead of on innovating new services and the proof is in the FED wasteful taxpayer money printing.
Anonymous   |     |   Comment #15
Had a foreign customer use SWIFT to transfer my payment to my US Bank...very nice and quick...one day as I recall
cactus   |     |   Comment #4
This story doesn't address the obvious question of whether they are talking about next-business-day or next-calendar-day. I assume next-business-day.
me1004   |     |   Comment #9
The ACH operates only M-F, and not on federal holidays. So, it is implicit it is next business day.
dave9354   |     |   Comment #6
Wonder if there will be fees for this?
Anonymous   |     |   Comment #7
I bet. This is not an upgrade of the ACH system, rather adding a parallel option. And why would banks offer a better option, that they even need to upgrade their system for, free?
Anonymous   |     |   Comment #11
Lifted quote from FatWallet

Just saw today that CapitalOne360 is discontinuing the ACH service and moving to clearXchange.

CapitalOne said: Hey there. Just a heads up that we'll be retiring this P2P Payments service later this year and switching over to a new one, P2P Payments powered by clearXchange. The new service lets you send money even more easily - all you need is the recipient's email address or mobile phone number.

Curious? Go ahead and try the new experience today. Otherwise, you can keep using the old version for now and we'll send you an email with more details when we get closer to making the switch.
Anonymous   |     |   Comment #12
Link to above

jimbeau   |     |   Comment #13
I wonder what the consumer law is for sending "money" to an email address or mobile phone number?  Take a good look at the disclaimers and indemnification clauses on clearXchange's website.   Anytime a bank tries to force something down it's customer's throat you can bet it isn't in the customer's best interests. 
klink   |     |   Comment #20
Just checked one of my accounts at Navy Federal. Message to me was concerning current bill pay users which I would understand to mean anyone with a checking account. Same day ACH payment service is now available at a cost of $5.00 per transaction. So much for free.

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