NACHA, the Electronics Payments Association, announced yesterday that its membership banks have approved a proposal that will enable same-day settlement through ACH for consumers and businesses among 12,000 financial institutions in the U.S.
The finalized rules represent a major overhaul of the decades-old automated clearinghouse network, which serves as the backbone for domestic payments, supporting 90 percent of the total value of payments in the US.
Today, ACH settlement occurs once overnight in batches. The new plan, which will be implemented in three phases by 2018, introduces two same-day settlement windows:
Same Day ACH will build upon existing, next-day ACH Network capabilities and establish a new option for same-day clearing and settlement via ACH. Under the rule, two new same-day settlement windows will be added to the ACH Network, increasing the movement of funds between financial institutions from once each day to three times each day. The rule also requires that all Receiving Depository Financial Institutions (RDFIs) receive same day transactions and provide faster funds availability to customers. Additionally, the rule establishes the methodology for a Same Day Entry fee as a mechanism for RDFIs to recover some of their costs for enabling and supporting mandatory receipt of same-day ACH transactions.
“The financial services industry has come together through private-sector rulemaking to increase the speed of payments,” said Janet O. Estep, president and CEO of NACHA. “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. Same Day ACH creates value for end users through the certainty of its reach to all bank accounts in the U.S.”
NACHA’s same-day plan is a huge step forward toward modernizing US payments, an arduous task that NACHA’s membership should be commended for passing. The final vote reinforces the notion that collectively, the country’s financial institutions are committed toward reaching faster, smarter settlement.
The end goal, of course, is real-time settlement, something that other countries like the UK, Mexico, and Sweden have already achieved.