NACHA on Tuesday opened for comment a sweeping proposal to introduce a same-day settlement mechanism for the automated clearing house network. The comment period will run through Feb. 6, the regulatory body for the ACH announced.
If the proposal is approved, the ACH network will process almost 1.4 billion same-day payments annually within 10 years of the system's full rollout, NACHA says. The proposal also contains what NACHA calls an “interbank fee,” projected to be 8.2 cents per transaction, payable by originating banks to receiving banks.
The new fee, which NACHA says is subject to reduction “if volume exceeds expectations,” is meant to compensate receiving institutions for costs involved in accommodating same-day settlement. Indeed, the overriding purpose of the fee, NACHA says, is to “ensure ubiquity of a new, same-day ACH capability.” Under the proposal, receiving banks will be required to handle same-day settlements.
NACHA, which in March first floated a renewed effort to achieve same-day settlement on the ACH, says it is seeking comments on the proposal from all network participants and “interested parties.” It has posted information about the proposal, as well as the proposal itself, here.
The proposal calls for same-day capability to be phased in in three steps over an 18-month period starting in September 2016 and ending in March 2018. The steps would introduce multiple settlement windows during the day and would include both ACH credits and debits. Currently, ACH transactions are typically settled on the next business day.
NACHA says it has studied a number of so-called use cases for same-day settlement but envisions businesses and financial institutions finding the faster processing particularly useful for expedited bill payments, account-to-account transfers, payroll, and business-to-business payments.
NACHA first proposed a same-day system in 2012, but the proposal was vetoed by the organization’s voting members. It says the reasons for this were that the original proposal didn’t add enough new functionality to the ACH and that it didn’t provide a strong enough business case for receiving institutions. With the new use cases and the proposed fee revenue for receiving banks, NACHA says its new proposal has remedied those shortcomings.
The new NACHA proposal is part of a general movement in the payments industry to speed up settlement times for electronic transactions. The Clearing House, a major ACH processor controlled by the nation’s biggest banks, has proposed building a real-time payments system, and the Federal Reserve has said it is working on a plan of its own for near-real-time payments.