Five Things to Look For in a Next-Gen ACH Solution

Sep  15 
Laura Clary  Vice President, Product Management, Enterprise Payments Solutions, Fiserv 

It’s not your grandmother’s ACH anymore.

ACH is one of the oldest digital payment solutions, but it’s still relevant. Use of ACH is on the rise, especially now that the Same Day ACH dollar limit has been increased to $1 million per payment.

The ACH Network moved 7.5 billion payments in the second quarter of 2022, led by growth in Same Day ACH and business-to-business (B2B) payments, according to NACHA. There were 185 million Same Day ACH payments transferring $486 billion in the second quarter – increases of 24.4% and 94.4%, respectively, over the same time period in 2021.

Direct deposit, bill pay and person-to-person exchanges have become permanent expectations in consumers’ minds. Revitalized, real-time ACH processing makes those transactions simple, safe and fast for customers.

But for the back office with older ACH systems, manual or semi-automated ACH processes can be slow and error prone, exposing financial institutions to unnecessary risk. To meet growing ACH volume – and emerging customer needs – financial institutions can offer next-gen ACH processing capabilities by implementing five enhancements:  

1. Advanced efficiency
Both the staff and the institution benefit from the reduction of slow, manual tasks. Next-gen ACH processing solutions use rules-based handling to initiate business interventions and tackle time-consuming exceptions. Only transactions that require special handling are stopped, and the majority are straight-through processed. ACH processing can be automated across multiple cutoffs and service-level agreements (SLAs), simplifying and accelerating key processes for staff.

2. Tighter integration
To avoid manual activities, today’s ACH solutions require a higher level of integration with APIs and between data files. Tighter connections can speed up and improve data entry, account setup, confirmations, reconciliation, accounts payable and accounts receivable. Real-time connections with the account processing platform (as well as Office of Foreign Assets Control and anti-money laundering programs) also ensure data and transaction accuracy and reduce fraud.

3. System standardization
Financial institutions that operate a single payments system have a serious operational advantage over their competition and increase the value proposition of their technology. Proven workflows and training can be leveraged across the entire technology stack, enabling staff to support the payments environment more holistically. Processing, clearing and settlement are faster and more streamlined. Staff no longer have to wait for the processing window to run in order to work an exception; pools of payments can be addressed as soon as they’re detected and hit the screen.

4. Processing flexibility
Next-gen ACH gives financial institutions the flexibility to continuously collect, clear and settle payments, including single-item settlements. No longer bound to batch-based dependencies or other processing windows, financial institutions can process transactions on arrival – or even accommodate later cutoffs.

5. Data transparency
Customers now expect more timely and detailed information about their payments, whether they’re outgoing, incoming or cross-border payments. Financial institutions also need greater visibility into alerts and related account information. Modernized ACH accomplishes both. Managers can access detailed reporting in a few clicks and staff can manage exceptions online, in real time, and reach resolutions faster.

ACH as a competitive differentiator
Financial institutions aren’t the only beneficiaries of next-gen ACH. Continuous inbound collection and increased STP result in faster processing, faster payments and faster settlement, which are differentiating features that also help customers.

To further your payments business, consider advancing one of the oldest tools in the payments business: ACH. Significant gains in functionality can provide long-term value for your institution and its customers.