Understanding the NACHA same-day ACH proposal
December 19, 2014

In early December, the National Automated Clearing House Association announced a new proposal allowing ACH payment processing to occur in the same day. Currently, the system completes transactions between banks in at least one business day, though the usual average can be two to three. In a time when credit card payments are usually posted in the same day and checks are slowly dying out, the need for efficiency improvements within interbank transfers has become paramount among businesses and customers. It's become enough of an issue that the Federal Reserve has also sought to make adjustments to the current system. NACHA's same-day proposal, now open for comment until Feb. 15, 2015, has several changes from its previous proposal, some of which will make it more likely to succeed. Retailers with integrated payment systems should be paying significant attention to this development, as it will greatly affect how payments are made in the future.

Everything at once
The key development of NACHA proposal is standardization. The same-day method would be a mandatory requirement for all member banks in the organization, which controls ACH processing in the private sector. This issue is considered critical by NACHA president Jan Estep, who in an interview with PYMNTS noted that the Federal Reserve, which controls ACH among public banks and credit unions, has had an opt-in same-day system. It hasn't caught on because of a chicken and egg situation in which businesses don't use it because not every bank has it, while banks refuse to implement it because businesses don't utilize it. The ubiquity extends beyond the users of the system: Almost all transfers between banks would be covered under the new proposal, with the exception of international transactions as well as those exceeding $25,000.

There would be two payment windows during the day under the new system. The first would be a morning window, in which payments received by 10 a.m. Eastern time would be settled by noon. The second, in the afternoon, would have payments made by 3 p.m. and settled by 5 p.m. Additional provisions have been made so that funds would be available to the payee by 5 p.m. local time.

Another critical factor is fees. Each transaction would be subject to a 8.2 cent fee. The intent of this fee, which would likely be transferred to customers, is pay for the cost of upgrading current systems to reach same-day capability.

NACHA proposed that the new system would be completed in three phases over two years starting in 2015. After the comment period closes in February 2015, the organization will analyze the information and use the results to write a ballot for all members to vote on in the latter half of next year.

Nexus: G-WEBCD3