November 15, 2016
By John Stewart
The faster-payments movement in the United States took a key step forward late in September with the automated clearing house network’s adoption of same-day clearing, and now numbers are available for the first full month of faster ACH processing.
A total of $4.98 billion on 3.8 million ACH credits moved across the network last month under the new same-day rules, according to data released Tuesday by NACHA, the rulemaking body for the nationwide system.
“This data shows strong use of same-day ACH and is consistent with NACHA’s expectations based on anticipated use cases and industry dialogue,” the Herndon, Va.-based organization said in a statement. “It also demonstrates how Same Day ACH serves as a new ubiquitous U.S. faster payment option that supports marketplace demands.”
Nearly half of the same-day transactions were, as many experts expected, direct deposits, including emergency payroll and pension payments, according to NACHA. There were 1.9 million of these payments, amounting to $1.6 billion.
Another large category was business-to-business payments, which accounted for 1.4 million transactions, or about 36% of same-day volume in the month. These totaled $2.8 billion. Faster settlement was less used for two other payment categories. Person-to-person payments accounted for 506,000 transactions while consumer bill payments totaled 61,000.
Under NACHA’s same-day rules, receiving financial institutions are required to process same-day items, and NACHA president and chief executive Jan Estep tells Digital Transactions News that “people across the board were ready on the receipt side.”
Readiness isn’t quite as high among some originating processors, according to Estep, who refers to these firms as “outliers.” “The majority [of processors] are ready and offering [same-day] origination,” she says. “Unfortunately, some other processors aren’t quite as ready. We’re really pushing them to make it available because the demand is there. The outliers clearly need to pick up the pace.”
One application NACHA has noted is the use of same-day processing for daily payment of credit card receipts to merchants. “Even on day one, we saw some merchant card funding going through,” Estep says. “Same-day ACH is a really nice value proposition for an acquirer.”
The ACH began same-day processing of credit transactions on Sept. 23, and will follow up with same-day debits starting Sept. 15 next year. In effect, the network is moving up settlement by a day by adding two daily settlement windows to the existing one.
The move follows years of planning and preparation by NACHA, including a membership vote in May 2015 to approve the same-day plan. One key to winning approval was NACHA’s willingness to reduce a so-called interbank fee on each same-day transaction from 8.2 cents to 5.2 cents. The fee is paid to receiving financial institutions by originating institutions, and will likely be passed on with a markup to originators.
The new fee offers a revenue opportunity for originating institutions, but some bankers and experts have expressed caution about the potential for increased risk as same-day processing leaves less time to inspect files for fraud.
While same-day clearing is now under way and apparently meeting expectations, the trend toward even faster payments has led a number of organizations—including The Clearing House Payments Co. LLC and the Federal Reserve—to work on new systems for real-time settlement.
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