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So far, most observers would agree same-day ACH credit processing, introduced nearly a year ago on the nation’s automated clearing house network, has been a success. Users appear to be satisfied with the service, and risk appears to be under control, observers say, despite the shorter windows for fraud detection.
But as the ACH system prepares to introduce same-day debits on Sept. 15, the most recent same-day statistics released by NACHA have raised a question. According to NACHA’s numbers, both transaction volume and total dollars fell in the second quarter compared with the first three months. Some 11.9 million same-day transactions flowed through the ACH network in the second quarter, down 10.5% from the first quarter. Dollar volume was down 6%, to $16.6 billion from $17.7 billion.
The same-day ACH rules from NACHA, the Herndon, Va.-based regulator for the network, provide for transactions to be cleared and settled on the same day banks receive them, so long as clearing windows are met. Standard ACH generally clears and settles the next day. Uses such as emergency payroll help fuel same-day traffic. Indeed, direct deposits accounted for 54% of all same-day transactions in the first quarter, followed by business-to-business payments, at 32%, and person-to-person transactions, 12%. The first quarter, too, showed a nice 13.6% lift in transaction volume from the fourth quarter, the first full quarter of same-day operation.
So why the step down in the April-through-June period?
NACHA itself chalks it up to seasonality and the fact that the service is still so new it hasn’t had a chance to establish a secular trend. “Without a baseline allowing us to compare second quarter year-over-year, the difference between quarters is not particularly significant,” says Jane Larimer, executive vice president for ACH network administration and general counsel, in an email message. “We will know more after [same-day ACH] has been in place for at least a whole calendar year.”
Nancy Atkinson, who follows the ACH as principal at GTB Consulting, a Pittsburgh-based consultancy, argues this is probably the case. “I think it’s too soon for us to know what creates demand for same-day payments, other than late payroll and late utility bills,” she says by email.
Costs, however, may have played a role. Under the same-day rules, financial institutions are required to receive same-day items. To compensate for that cost, the network provides for a 5.2-cent fee per transaction, paid by the originating institution. That bank then passes the fee on, with a markup, to its client. The impact of that cost may have made a difference in recent months, argues Sarah Grotta, a senior analyst at Maynard, Mass.-based Mercator Advisory Group.
Before same-day processing was available, businesses tended to select the current date in an effort to move payments as fast as possible, Grotta notes. Now, with originators levying fees, at least some of those clients are avoiding that tactic, she adds. She has heard, anecdotally, of fees as high as $1 per transaction. “I believe what we are seeing is an adjustment to policy and software on the part of businesses to be more selective when they choose to use [same-day ACH],” she says by email.
“Like standard ACH fees, the cost of [same-day ACH] will be dependent on the business’s risk rating, transaction volumes, and overall relationship.” Grotta says.
Whatever the explanation is, Larimer argues there’s no cause for alarm in the experience of one quarter. With companies and government agencies just starting to get real-time payments off the ground, the ACH has a national faster-payments system up and running that processed 25.2 million transactions in the first six months of this year. “Annualized volume of over 50 million [same-day] transactions is a success story,” says Larimer.
