NACHA Moves on Same-Day ACH…

Automated clearing house transactions have settled next day for years, but pressure has been building to speed things up in the 40-year-old system that links nearly every financial institution in the country.

So NACHA, the organization that manages the ACH, last month opened for comment a sweeping proposal to introduce a same-day settlement mechanism. That may please folks in the faster-payments lobby, but speedier clearing won’t come without cost.

That’s because the proposal also contains what NACHA calls an “interbank fee,” projected to be 8.2 cents per transaction. So-called ODFIs—that’s ACH parlance for banks that originate transactions, often on behalf of businesses that need to receive payments—will pay the new levy to RDFIs, the banks that hold accounts for consumers and others who owe money to businesses.

The fee, which NACHA says is subject to reduction “if volume exceeds expectations,” is meant to compensate receiving institutions for costs involved in accommodating same-day settlement. Indeed, the overriding purpose of the fee, NACHA says, is to “ensure ubiquity of a new, same-day ACH capability.”

RDFIs may be glad for the revenue. Under the proposal, they will be required to handle same-day settlements.

If this new gambit is approved by NACHA members, the ACH network will process almost 1.4 billion same-day payments annually within 10 years of the system’s full rollout, NACHA forecasts.

The proposal calls for same-day capability to be phased in in three steps over an 18-month period starting in September 2016 and ending in March 2018. The steps would introduce multiple settlement windows during the day and would include both ACH credits and debits.

NACHA says it has studied a number of so-called use cases for same-day settlement but envisions businesses and financial institutions finding the faster processing particularly useful for expedited bill payments, account-to-account transfers, payroll, and business-to-business payments.

NACHA, which in March first floated a renewed effort to achieve same-day settlement on the ACH, says it is seeking comments on the proposal from all network participants and “interested parties.” It has posted information about the proposal, as well as the proposal itself, on its site at www.nacha.org/rules/request-comment-same-day-ach-move-payments-faster. If you want to weigh in on it, you have until Feb. 6.

This isn’t the first time NACHA has tried to introduce same-day processing. Its first attempt came in 2012, but that proposal ran into opposition from big banks. Though it won a majority of yes votes, it fell short of the majority needed for enactment.

NACHA says the reasons for this were that the original proposal didn’t add enough new functionality to the ACH and that it didn’t provide a strong enough business case for receiving institutions. With the new use cases and the proposed fee revenue for receiving banks, NACHA says its new effort at same-day settlement has remedied those shortcomings.

The renewed effort is part of a general movement in the payments industry to speed up settlement times for electronic transactions. The Clearing House, a major ACH processor controlled by the nation’s biggest banks, has proposed building a real-time payments system, and the Federal Reserve has said it is working on a plan of its own for near-real-time payments.

—John Stewart