As the ACH Network Readies for Covid Relief, Payments Groups Seek to Correct the Record on Funding Date

In response to erroneous reports about funds availability, The Clearing House Payments Co., Nacha, and seven other banking and payments groups said Tuesday that Economic Impact Payments from the federal government will start to become available to recipients Wednesday morning.

A statement from the nine groups, plus a separate statement from Nacha, the governing body for the automated clearing house network, sought to correct reports on social-media networks and in the press indicating the funds could have been distributed as early as this weekend.

Nacha’s statement says the ACH will clear and settle economic impact payments to banks and credit unions Wednesday, March 17, in accordance with the Internal Revenue Service’s instructions. Payments will be available to eligible taxpayers at 9:00 am local time, as called for under Nacha rules. As with the first two rounds of economic impact payments from the federal government, Nacha expects the number of direct deposit payments to total about 100 million.

By contrast, reports circulating last week mistakenly indicated payments would be available to recipients as early as last weekend, leading to some criticism online when the funds didn’t appear, a TCH spokesman tells Digital Transactions News. Also, a few challenger banks advanced funds to some users’ digital wallets with the expectation of reimbursing themselves when the federal funds arrived. That action added to the confusion about availability overall, the spokesman said.

“This is the third round of [federal relief] payments. Each time this happens, the IRS sends out funds on Thursday or Friday with an effective date the next Wednesday,” the spokesman said. The “effective date” refers to when the money is available in recipients’ bank accounts.

“The ACH network demonstrated its capacity to handle tens of millions payments above and beyond the normal daily volume of more than 100 million payments,” Jane Larimer, Nacha’s president and chief executive, said in a prepared statement last week after President Biden signed the American Rescue Plan into law, setting the stage for the latest disbursement.

Nearly 27 billion ACH payments totaling $62 trillion were made in 2020 under the previous disbursements, Nacha says.

Single taxpayers with an adjusted gross income of up to $75,000 and married persons filing a separate return, up to $112,500 for heads of household, and up to $150,000 for married couples filing joint returns and surviving spouses, are eligible to receive the payments, according to the IRS website. Individual taxpayers meeting those income thresholds will receive payments of $1,400.

Under the CARES Act signed last spring, 122.5 million economic impact payments were made by direct deposit, 38.5 million by check, and 3.8 million by prepaid card, according to the IRS. When the second round of economic impact payments were approved in December, another 100 million economic impact payments were made available on Jan. 4, 2021.