Navigating the Same Day ACH Rollout

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Same Day ACH

Your Path to Faster Payments

By Mark C. Dittman, IBT CEO

Same Day ACH is the result of an ACH Rules change, and as such, is automatically available to all network participants. This article is designed to help you understand how the rules will change so you can ensure your bank is prepared, consider the benefits and opportunities from multiple angles, and put you on the path toward faster payments.

The Same Day ACH rollout has three distinct implementation phases over the next three years:

Phase 1 is effective September 23, 2016, and requires all financial institutions be able receive Same Day ACH credit transactions. This does not apply to International ACH Transactions, or any single item in excess of $25,000. There will be two new transmission times for Originating Depository Financial Institutions (ODFIs): 10:30 AM ET and 2:45 PM ET. Receiving Depository Financial Institution (RDFI) settlement times are 1:00 PM ET and 5:00 PM ET, with credit availability by the end of the processing day. Note, state government will accept Same Day ACH, but federal government will not be participating initially.

Phase 2 is effective September 15, 2017, and adds Same Day ACH debit transactions to the mix. All other items remain as outlined in Phase 1.

Phase 3 is effective March 16, 2018, and makes funds from Same Day ACH credit transactions available to customers by 5:00 PM RDFI local time.

Consumer POV

Consumers can benefit from the lower-cost alternative Same Day ACH provides for Account-to-Account (A2A) or Person-to-Person (P2P) transfers. This reliable yet simple way to move money is also an opportunity to generate goodwill. Initially, only the receiver is required to process the payment, which could mean that consumers can only create credits to another account. While some systems may have the ability to originate credits to another account, Same Day ACH origination is optional.

Business POV

One of the most common use cases for Same Day ACH applies to business payroll. Business users may process payroll that was overlooked or did not have available funding, allowing them to avoid potential embarrassment and employee frustration.

For both consumers and businesses, banks need to have the file in process no later than 2:45 PM ET, which may mean earlier cut-off times for your system if you are originating Same Day ACH files.

Bank POV

Many digital banking solutions will give bank customers the ability to initiate Same Day ACH payments. At the same time, both consumer and business accounts will have access to bill pay, which may offer same day payment processing, but using a payment method outside of Same Day ACH. Although the end result may be similar, cut-off times and cost will likely differ. Wholesale cost of Same Day ACH is $.052, and a typical retail price for Same Day transactions outside of Same Day ACH can be $.50 to $1.00. A potential negative impact on bill pay provider revenues could arise with the addition of the Same Day ACH option, which has the potential to slow adoption.

Mark Dittman
©2013 Darren Carroll.

“Now is the time to educate your clients and assist them with their preparations prior to originating Same Day ACH files. Go the extra mile, show them how to they can leverage Same Day ACH and allow them an opportunity to test their systems in advance of your go-live date.”
– Mark Dittman, IBT CEO

Bank Staff and Consumer Education

It is critically important to educate your staff and customers on the solutions you have decided to offer. Digital banking and bill pay solutions often overlap. Be aware of these potential conflicts, and work with your vendor(s) to disable overlapping solutions to minimize customer support.

Cost and Options — As you activate Same Day ACH, understand how your system will deliver solutions to your customers. Are you activating Same Day ACH for all customers, specific customers, or by account? Determine your operational cost and the fee that you will pass on to your customer. Understand your fee options with the system you have selected: percentage of transaction with a cap, fixed-rate, or some combination. Once you have this in place, you should address any necessary disclosures at least 30 days prior to offering Same Day ACH ODFI services.

Third-Party Systems — If your clients use a third-party payroll tool, it may place today’s date in the ACH file as it has always done. Same Day ACH makes it possible for this file to be placed on the network and processed as a Same Day ACH file, and you may incur un-intended Same Day ACH fees. Your system should have the ability to reformat the third-party file, ensuring it is processed on the correct date as intended. Understand where your system is going to assess a fee to your customer for Same Day ACH. Have mitigating steps in place should a customer meet the deadline for Same Day ACH and accept the fee, but an operational issue prevents the file from being uploaded within the required transmission time.

Commercial Cash Management — For Commercial Cash Management users, it is possible for Same Day ACH files to be created within the processing window, but for final approval to be processed afterward. Understand how your solution is managed so customer support teams can be responsive.

Systems Interactions — Beginning September 23, 2016, it is possible to receive a return Same Day ACH file. If an ODFI generates a Same Day ACH file and submits by the 10:30 AM ET cutoff, an RDFI can return the credit (and in Phase 2, the debit as well) before the 2:45 PM ET cut off time. If this occurs, know how your core, item processing, and digital banking systems interact with Same Day ACH and how the information is delivered to your customer(s). Similar to returned checks, understanding your clients’ perspective of the digital banking channels is important in order to facilitate support calls.

NOCs — Notice of Change (NOCs) and Pre-notes are both eligible if they meet the guidelines for Same Day ACH. Make sure you have a process in place to manage these items.

With the critical timing of both Same Day RDFI and ODFI files, it is unreasonable to think this manual process can be without human error. If you are moving files manually, work with your processor to automate, or put policies in place to manage exceptions.

Sources used for this article, and recommended for expanded research include: NACHA’s Same Day ACH: Moving Payments Faster, and FRB Services’ Same Day ACH FAQ.

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