Phase 1 of Same-Day ACH Arrives 9/23

by Sarah Grotta 0

Mobile banking and payment

Same day ACH begins its multi-year roll out this month with same day acceptance of credits. What does this mean for receiving depository financial institutions? An article in Banking Exchange outlines the major implications:

With the support of same-day ACH credits in September 2016, banks will need to make changes to support the initiation and receiving of these credits with a settlement within the processing day. This means they will need to modify processes and systems to support the sending/receiving of ACH transactions within the new cut-off windows. This will likely be a change to their current procedures as well as some technical modifications to their processing systems. They will also have to figure out how they are going to report to and notify customers of these settled transactions.

The article also comments on some of the initial customer benefits of same day ACH:

Corporate entities could see that they have an opportunity to have more flexibility and immediate knowledge of their cash flows.

Consumers will have the ability to make payments in a more immediate nature, which is something that a lot of consumers have grown accustomed to in the payments arena.

The long-term effect is that ACH, as with other payment systems around the world, is moving to a faster settlement. This will have a trickle-down effect on many aspects of low-value payments, such as risk assessments and agreements.

What is still unknown is if the effort financial institutions have to make to meet the demands of same day ACH will be able to create a profitable business through consumers and businesses who want to use the service. In other words, is there a business case for same day? Those FI’s that provide ACH services to businesses in specific markets where same day is a natural fit such as payroll processors and billers, the answer is “most likely”. The rest will have to wait and see.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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