Experts Expect Even Faster Growth for Same-Day ACH As a $100,000 Cap Goes Into Effect

Faster payments got a boost Friday as Nacha, the governing body for the nation’s automated clearing house network, raised the limit on same-day payments from $25,000 to $100,000. The move follows a similar action earlier this year by The Clearing House Payments Co. for real-time transactions and is expected to have appeal particularly for business-to-business payments, where the lower cap was widely seen as crimping usage.

Nacha says it is responding to industry demand in quadrupling the dollar cap. “This is one of the most requested changes Nacha has been asked for since same-day ACH debuted,” said Nacha president and chief executive Jane Larimer, in a statement. “With the new $100,000 limit, we expect same-day ACH will be even more useful to businesses and consumers.” The ACH network, which links to virtually every financial institution in the country, launched same-day processing for credits in 2016 and followed with debits a year later.

Friday’s move is expected to help drive more same-day volume as businesses in particular respond to the higher limit. ACH experts point to health-insurance payments to hospitals and doctors as likely to be particularly responsive to the new cap. “One thing I’m aware of is health-care payments. It was heavily skewed toward checks,” says David Fortney, an executive vice president at New York City-based TCH, who spoke to Digital Transactions for an upcoming article about the ACH. Now, with a wider dollar range, this segment should pose “a lot of growth potential,” he says.

Nacha estimates the higher limit will boost the portion of B2B payments overall that are eligible for same-day processing to 97% from 91%.

TCH, moved its dollar limit on real-time clearing to $100,000 effective Feb. 1, also in response to industry demand. Unlike real-time processing, which generally moves money within a matter of minutes, same-day ACH settles by the end of the processing day, whereas ordinary ACH transactions do so typically next day.

Nacha officials say the reception of the same-day option has been strong, even before the effective date for the higher dollar limit. “We have been pleasantly surprised” by the uptake so far,” says Michael Herd, a senior vice president at Nacha, who also spoke to DT for its upcoming article, which will appear in the April issue.

According to Nacha statistics, the network moved 250.4 million same-day transactions last year, up 41% from 2018. The dollar volume was $247 billion, a 55% increase.

Another change expected to lend further momentum to same-day processing will arrive in March next year, when the ACH will add a third, and later, window for entry of daily transactions. Under that rule change, the Federal Reserve will keep its National Settlement service open until 6:30 p.m. Eastern Time, one hour later than its current closing time. The Fedwire Funds Service will stay open a half hour longer until 7 p.m. As a result, the latest daily deadline for same-day ACH will occur at 4:45 p.m. Eastern Time, two hours later than the current cut-off. 

That should allow more same-day volume to enter the system from parts of the country in time zones that make it difficult to meet an early cutoff. “It really moves the needle for West Coast entities. That will make a difference,” says Fortney.