Plans Move Forward for “Same Day ACH”
You know about ACH — those Automated Clearing House payments that we also offer here at AVPS. Sometimes called “Electronic Check Processing,” it is, as our own website notes, “a form of electronic payment… often confused with a wire transfer because it works in a similar fashion. However, unlike a traditional wire transfer, it can be used to process higher amounts, or for small payments which may settle from 1 to 2 business days.”
In addition to facilitating online check acceptance, ACH has effectively blended traditional payment methods with modern ones. However, as an attentive reader of this blog, you are well aware that the payment landscape is in a constant state of evolution and transformation, even at this very moment.
And today, we speak of the changes coming to ACH.
Changes Coming to ACH
As the NACS Online site reports — that’s the association for convenience stores (and gas station/convenience store combos) — the “The Electronic Payments Association (or NACHA) announced that its voting membership approved Same Day ACH, enabling same-day capability for virtually any ACH transaction and creating options for the businesses, governments and consumers who want to move their money faster.”
NACHA’s President, Janet O. Estep, as quoted in the Greensheet industry newsletter says “Same Day ACH serves as an immediate action the industry has undertaken to modernize the payments system and creates a building block for a variety of products and services.”
Overview of the Changes
In their overview of the changes, the Pymnts.com site expounds a bit on how it will work: “As part of the new rule approved by the membership, there will be two additional same-day settlement windows. Any originating institution can offer products that clear on the same day knowing that all receiving institutions will have the capability, as required by the rule change, to process the transactions that same day.”
There’ll be some time to get ready: The first of the three “phases” for the ACH changes starts in the fall of 2016 (the fall of 2015, after all, will be keeping everyone busy with the EMV switchover): In Phase 1, as NACS summarizes, “ACH credit transactions will be eligible for same day processing, supporting use cases such as hourly payroll, person-to-person (P2P) payments and same-day bill pay. During Phase 2, the implementation of same-day ACH debits will introduce a multitude of possibilities for consumer bill payments, encompassing utility bills, mortgage payments, loan repayments, and credit card payments, among others. Phase 3 introduces faster ACH credit funds availability requirements for Receiving Depository Financial Institutions (RDFI).”
Implications for Payment Methods
So the ACH Debits, in Phase 2 especially, will become another method of virtual, instant payment.
It is yet to be determined whether this will enable each individual’s financial institution to function in a manner similar to PayPal, incorporating their own instant payment systems and applications. However, one thing is certain: the methods of receiving payments for your business and making payments to others will continue to evolve and transform, just like the shifting sands on a summer beach.
AVPS, meanwhile, is here to help you get ready for it, so when fall of ‘16 rolls around, you’ll be able to say: “That’s so last year!”