In early December the Electronic Payments Association, alternatively known as NACHA, released more details on their proposal for a same-day ACH payments system while issuing a request for comments submitted by early February. Meanwhile the Federal Reserve is providing a multiyear roadmap for facilitating real-time payments and The Clearing House, a trade group representing large financial institutions, announced their plans to build a same-day payment system in October.
While these announcements, road maps and requests for comments show that ball is rolling, the planned same-day ACH settlement implementation isn’t expected to begin until September, 2016. Even this is just the beginning of a three phase process that will fully mature in March, 2018. While this needed evolution of the ACH payment systems may not be starting for more than a year, NACHA, The Clearing House (TCH) and the Fed will be taking measures this year in efforts to bring same-day ACH payments into fruition.
For same-day payments to become a reality, it is crucial to have all three groups on board. This is not NACHA’s first proposal to make same-day payments a reality. In 2013, however, The Clearing House (TCH) was opposed to NACHA’s same-day ACH payments proposal, despite the fact that the ten largest financial institutions in NACH are all co-owners of TCH. Ultimately this proposal was shot down.
Sentiments have since changed. All parties seem to be working towards the same end goal and NACHA CEO, Janet Epstep, echoed this saying that the Federal Reserves real-time payments proposal in conjunction with NACHA’s same-day settlement rule would together speed up consumer payments.
Although we are currently in an open comment period and things could change, according to NACHA’s proposal this is what the future of faster ACH payments may look like:
Phase 1 is planned to begin September 16, 2016. Domestic transactions less than $25,000 are eligible for same-day settlement, although only for ACH credits, not debits. ACH operators (NACHA and the Fed) would provide a morning (10 AM ET) and afternoon (3 PM ET) clearing window with funds available by the end of the RDFI’s processing day. Under the proposal all Receiving Depository Financial Institutions (RDFIs) would be mandated to be able to receive same-day ACH payments. To help cover the costs, Originating Depository Financial Institutions (ODFIs) would pay a flat 8.2 cents per transaction fee to the RDFIs. This interbank fee would also be tiered to volume such that as same-day transactions increase the fee goes down.
As proposed, Phase 2 would begin in September, 2017 and would then cover both ACH credits and debits. Phase 3 would follow about 6 months later in March, 2018 then mandating 12 PM and 5 PM ET settlement times to coincide with the morning and afternoon clearing windows, and requiring funds availability by 5 PM local time for the RDFI.
Preparing for same-day ACH payments is something financial institutions will have the plan and budget for in 2015. NACHA estimates the industry will need to invest $118 million in technology upgrades and incur another $49 million in new annual operating expenses. TCH and the Fed estimate a total industry cost of nearly $4 billion as the largest FI’s may have costs of $100 million each.
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