Same-Day ACH: A New Day for Payments


On September 23, the financial services community flipped the switch on receiving same-day ACH payments. For the most part, this shift was "business as usual" for financial institutions and providers, thanks to months of planning and preparation ahead of the new rule from NACHA, the National Automated Clearing House Association.

Not only do these changes help satisfy consumers' expectations for faster payments, they also introduce a new revenue opportunity if you offer same-day ACH transactions as a premium service.

When the second and third phases of the rule are implemented in 2017 and 2018, receiving depository financial institutions will be required to process both credits and debits by the end of their processing day. You may be among the many financial institutions that have already made system changes to receive ACH debits now, ahead of the next phase.

Not only do these changes help satisfy consumers' expectations for faster payments, they also introduce a new revenue opportunity if you offer same-day ACH transactions as a premium service.

The Point talked to Jamie Deterding, SVP of Product Management for Bank Solutions, Fiserv, to learn more about the impact of same-day ACH payments.

Why does the industry need same-day ACH?

Until this change, nearly all of the 24 billion ACH payments moved last year were processed on a next-day or two-day basis. That's just not fast enough for today's consumers, who are used to instant access to information, connections and content. Same-day ACH processing meets consumers' need for speed and underscores the importance of financial institutions and ACH in the payments ecosystem. As this capability evolves, I expect more and more use cases to be built around it – more payment options that will drive revenue for financial institutions and faster payments for their customers.

What's the opportunity for financial institutions?

The biggest opportunity today may be the new services banks and credit unions can offer businesses to drive new revenue streams. Being able to originate ACH payments and receive those funds by the end of the day positively impacts business owners' cash flow position. In the case of a missed payroll file, same-day ACH processing helps businesses avoid the time and effort of writing checks or issuing costly individual wire transfers. Like consumers, business owners expect their money to move quickly and efficiently. The ability to debit customers for what they owe and collect those funds the same day with same-day ACH is a huge advantage for businesses.

How can financial institutions benefit from same-day ACH?

No longer will ACH payments have to be warehoused for a day or two, which is good news for financial institutions. In addition, same-day ACH processing can create a competitive advantage for financial institutions, which may want to package services differently for different customer segments. For businesses, same-day ACH processing can be bundled with other services like mobile deposit and online bill payment.

The new rule provides a new way to drive additional payments. Many banks and credit unions may be concerned checking accounts will simply become settlement accounts for payments, but now, financial institutions can package services to drive additional revenue. It's a great opportunity for financial institutions that choose to promote same-day ACH and encourage businesses to take advantage of it.

What can financial institutions do now?

There appears to be a wait-and-see strategy from financial institutions as they hold on decisions to see what other banks are doing and what they're charging for the service. However, same-day ACH can become a competitive advantage, especially for financial institutions that actively promote the service. With this strategy, same-day ACH becomes an opportunity to drive top-line revenue and fee income, while providing the payment speed today's consumers expect.

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