Fed Delay Causes NACHA To Postpone a Third Processing Window for ACH Transactions for Six Months

Automated clearing house governing body NACHA reported Tuesday that a third daily processing window for ACH transactions will be delayed by six months.

The window, a component of NACHA’s years-long, multipronged effort to facilitate same-day clearing and settlement of ACH transactions, is now set to go live March 19, 2021, instead of the originally scheduled Sept. 18, 2020.

The reason for the delay lies with the Federal Reserve, operator of one of the nation’s two ACH switches; bank-owned The Clearing House Payments Co. LLC  operates the other. The original live date depended on NACHA receiving okays from the Fed’s Board of Governors by June 30 of this year.

NACHA chief operating officer Jane Larimer tells Digital Transactions News that the Fed has informed NACHA it will be unable to provide needed approvals for changes in its ACH services, including the Fedwire Funds Service and the National Settlement Service, by June 30. “They’re not going to be able to meet our timeframe,” she says.

An operations bulletin posted on Herndon, Va.-based NACHA’s Web site explains that “previously, the Fed board informed NACHA that it would need to issue a request for public comment about changes to Federal Reserve services prior to notifying the industry that it would support the new window. As of the date of this operations bulletin, that public-comment notice has not been issued, and the Fed board has not informed NACHA when that might happen.”

A 2018 NACHA rule for expanding same-day service calls for a six-month delay in such an event. A Fed spokesperson was unavailable for comment Tuesday afternoon.

Once it goes live, the additional window will give financial institutions until 4:45 p.m. Eastern time to submit transactions to the network. Banks, especially those in Mountain and Pacific time zones, strongly endorsed the change.

It’s unclear how much of a setback the window delay represents for same-day ACH, but it comes at a time when payments providers of all varieties are trying to speed up their services. In the latest example, PayPal Holdings Inc. on Tuesday added a new service called Instant Transfer to bank, with JPMorgan Chase & Co. and The Clearing House as partners.

“In light of today’s announcement by PayPal that they’re enabling instant money transfer via Chase and TCH, this is bad timing,” says consultant Patricia Hewitt of Savannah, Ga.-based PG Research & Advisory Services.

But Larimer expects the delay will have no lasting effects, noting that same-day ACH volumes already are booming. “In 2018, there were 178 million same-day transactions, an increase of 137% over 2017,” she says by email. “NACHA anticipates little impact to continued adoption and usage of same-day ACH.”