Alternative Finances

Western Union To Deliver Same-Day ACH

The race for faster settlement through automated clearinghouse (ACH) payments continues to heat up. And Western Union soon may be in the driver’s seat.


Later this year, the funds-transfer company plans to introduce a same-day ACH option, Raj Agrawal, Western Union executive vice president and interim CFO, noted in an address at the William Blair & Co. Growth Stock Conference. “I would say that is the one of the components that is going to drive us to our growth targets next year,” he said.


Western Union offers an ACH-based product in the U.S. now, but it doesn’t support same-day settlement. However, the company believes such a service is something consumers want, “but we are going to manage the risk around that product first before we introduce it, and our plan is to introduce it later this year,” Agrawal said.

At first, Western Union will introduce it in a handful of markets and in some of the “key corridors, he said.

As the company expands its country presence, it also is looking to expand funding options. “Our business is largely funded from a credit card or debit card and sometimes from a bank account, but it is paid out in cash. The great majority of the business is paid out in cash because customers want to receive cash,” Agrawal said. “So the opportunity for us is to have more bank delivery in the received markets.”

Today, Western Union can deliver into a bank account in 49 markets, and expanding upon that is one of the company’s key growth areas as well, he said.

The company could face pricing and other competitive pressures in the move to speed up ACH transfers.

In May, Dwolla announced its new Next Day Transfers initiative, which improves bank transfer speeds in and out of the network to as little as two business days in total. The company charges a quarter for transfers over $10.

To keep its risk low, Dwolla is offering the faster payments only to approved “trusted parties,” which include businesses, nonprofits and government entities.

Funds transfers via the ACH system, which Dwolla is using, traditionally can take up to two to three days to get deposited, and then the recipient may have to wait another two or three days before the funds become available.

Dwolla also is developing its FiSync product, which supports immediate transfers between participating institutions’ accounts. The company expects to announce two new partnerships later this year.

In a interview last month, Jan Estep, NACHA president and CEO, cited the need for ubiquity in how ACH transfers are handled and noted how ACH credits could drive improved transaction security.


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