“Faster payments” are about to become a reality in the U.S.
NACHA’s membership, which consists of most financial institutions in this country directly or through regional associations, voted in favor of a change to NACHA operating rules that adopts Same Day ACH. That’s a speedier alternative to existing ACH which can take a day or more to settle and clear. The rule requires that all NACHA members have the capability to process any ACH transaction within the same day— a move that can help businesses and consumers move money faster.
"The financial services industry has come together through private-sector rulemaking to increase the speed of payments,” Jan Estep, president and CEO of NACHA, said in a news release. “Same Day ACH serves as an immediate action the industry has undertaken to modernize the payments system, and creates a building block for a variety of products and services. Same Day ACH creates value for end users through the certainty of its reach to all bank accounts in the U.S."
NACHA’s Same Day ACH will help expand and improve the next-day ACH Network capabilities, as well as help pave the way for same-day clearing and payments settlement via ACH. As part of the new rule approved by the membership, there will be two additional same-day settlement windows. Any originating institution can offer products that clear on the same day knowing that all receiving institutions will have the capability, as required by the rule change, to process the transactions that same day.
And according to NACHA’s news release, the “rule establishes the methodology for a Same Day Entry fee as a mechanism for RDFIs to recover some of their costs for enabling and supporting mandatory receipt of same-day ACH transactions.”
Same Day ACH will be rolled out in a three-phase process, starting Sept. 23, which includes:
- ACH credit transactions will be eligible for same day processing, supporting use cases such as hourly payroll and person-to-person (P2P) payments and same-day bill pay.
- Same-day ACH debits will be added, allowing for a wide variety of same day consumer bill payment use cases like utility, mortgage, loan and credit card payments.
- Introduction of faster ACH credit funds availability requirements for RDFIs; funds from Same Day ACH credit transactions will need to be available to customers by 5 p.m. RDFI local time.
In a December interview with MPD CEO Karen Webster, Estep spoke about the ubiquity of Same Day ACH and the importance of having all banks participating.
“One word that we use in the ACH network quite regularly is ubiquity. That definition to us means that there is the certainty of absolutely being able to reach any of the 12,000+ financial institutions in the United States. So it really is a mandatory requirement on the receiving end, not the originating end.
What that does is give value to the originator of the payment – someone making a payment really can then be assured that they don’t have to guess which financial institutions participate or not. When there are so many financial institutions in the U.S., that surety of knowing who you can reach is important.”
The rules adopted by NACHA are similar to proposals in the industry Request for Comment (RFC) it circulated earlier. Among the other rules previously discussed, the major changes allow for the same-day ACH payments to enable more time to process those transactions as the morning same-day window time period was modified. By taking into account the conversations in the payments industry — including the stakeholders pushing for same-day ACH, the new rules are also highlighted as a mode to bring the industry together to help move payments faster on the ACH network.
"Through dialogue, input and outreach, NACHA was able to balance differing perspectives and incorporate industry feedback from many types of organizations,” Estep said. “The result of this dialogue is a final rule that will benefit consumers and businesses that need to quickly pay bills and receive funds faster."
NACHA predicts that Same Day ACH will come from 10 primary use cases, and 64 sub-use cases, which includes same-day payrolls, expedited bill payments, B2B payments, and account-to-account transfers.
"Same Day ACH provides an option for the consumers, businesses and governments that want to move their money faster,” Estep said earlier this month. “It provides an immediate solution for moving payments faster and creates a building block for tomorrow’s products and services. The ACI survey results clearly demonstrate continued industry support for Same Day ACH and underscore the value and importance of the initiative to better meet the needs of customers."