NACHA On The Hill: Inside Same Day ACH

In May 2015, NACHA received approval from its membership to amend the NACHA Operating Rules to add two new settlement windows that enable same-day settlement and posting for ACH transactions. Any originating institution can offer products that clear on the same day, knowing that all receiving institutions will be required, per the rule change, to process the transactions that same day.

It’s now July – roughly three months away from the highly anticipated launch date of Sept. 23, 2016, when Same Day ACH credit transactions will be available. Phase 2 will add Same Day ACH debits, allowing for a wide variety of same-day consumer bill payments. Phase 3 will introduce faster ACH credit funds availability requirements for receiving institutions.

Peeling Away The Onion

But banks and corporate treasurers aren’t the only ones focused on the benefits of faster payments and Same Day ACH. Members of Congress in the U.S. are eager to understand how expediting the movement of money can help their constituents in their home districts. And, to make sure that they do, NACHA – and its Government Relations Advisory Group (GRAG) – schedules an annual pilgrimage to Washington, D.C., for an annual Capitol Hill Day. The goal is to provide education on the ACH Network, ACH payments and the NACHA Operating Rules.

Conversations with the public sector are an integral part of NACHA’s education-based advocacy in support of Same Day ACH, where it leverages GRAG to speak and work with members of Congress and their staffs to ensure the dialogue about the benefits of Same Day ACH are properly conveyed to policymakers from across the industry. This includes the Payments Caucus that the House and Senate established for members and staff to discuss emerging payments issues, particularly those related to faster payments.

This year that took place on June 8. That day, members of GRAG, which include leaders from large and small financial institutions and Regional Payments Associations across the country and members across party lines, including Democratic Rep. Kyrsten Sinema from Arizona, Democratic Rep. Gwen Moore from Wisconsin, Democratic Rep. David Scott from Georgia, Republican Rep. Tom Emmer from Minnesota, Republican Rep. Steve Stivers from Ohio, and Republican Rep. Blaine Luetkemeyer from Missouri.

As for the Caucus’ impression and interest in faster payments?

“They are extremely familiar with Same Day ACH. And it’s because we’ve kept them apprised for multiple years of where we were in the rule-making process and steps we took with respect the Same Day ACH initiative,” Bill Sullivan, Senior Director and Group Manager of Government and Industry Relations for NACHA, told Karen Webster in a recent conversation.

Through those conversations, Sullivan made it clear that Same Day ACH and “real-time payments” are different yet complementary.

“We make that very clear that the Same Day ACH solution is not in competition with real-time payment systems. We feel the two fit nicely together. Same Day is just a step in the direction of faster payments,” Sullivan emphasized.

He also spoke of the importance for both the private and public sector of the benefits of Same Day ACH.

“It’s the benefit of private sector rule-making that we were able to capitalize on the need for faster payments and respond through our rule-making process in a timely manner. And now we’re just a few months out from implementation,” Sullivan said.

Private-Public Collaboration

Sullivan pointed out during the many conversations he and his team had that day that since 2012, ACH gross volume has grown 26 percent and the NSF rate has dropped 21 percent.

Sullivan attributed this drop to the continued implementation of NACHA’s long-term risk management strategy, including the implementation of rules, such as the Network enforcement rule that went into effect in September 2015.

Looking Ahead: The Use Cases

As for what types of questions were raised by the members of Congress, he noted that almost all the questions were about readiness and whether banks were ready to implement Same Day ACH. To that, Sullivan said that, based on results from recent surveys that take into account some of the largest originating and receiving institutions in the U.S., almost all of them will be ready to roll out Same Day ACH as scheduled.  And in many cases, he said, they are building their systems for all three phases at once.

When speaking to the congressional staff about the benefits of each phase, particularly Phase 1, Sullivan said GRAG focused on the example of payroll as a major use case. For example, if an employer misses its payroll deadline in the standard environment, Same Day ACH is a solution to ensure that employees receive their pay as intended without having to issue checks or wiring funds to employees. Or, when paying contract or hourly workers, employers can pay them via Direct Deposit same day rather than writing checks.

“Payroll managers want the certainty of pay. They understand the ACH Network and value its current capabilities. But they understand there will be emergency cases where Same Day ACH could be a very useful tool to have. Even though they aren’t expecting to use it on a regular basis, they like the idea of being able to add another tool to their tool box, especially with the safety, security and assurance of the ACH Network behind it,” Sullivan said.

As for the advocacy efforts on the Hill, Sullivan said there were no surprises. Rather, he felt like the conversations continued the dialogue in the direction they needed to continue moving.