With Same-Day ACH Debits Coming, Experts Ask for Higher Limits, More ‘Windows’

Firms and financial institutions that have been using the automated clearing house network’s new same-day settlement system are generally upbeat about it, but the new regime is being implemented in phases, and the next phase, due in September, brings with it some misgivings.

That’s when ACH debits will start to be settled on a same-day basis, adding to the stream of same-day credits that began flowing last September. Speakers at a national ACH conference in Austin, Texas, on Monday said they looked forward to the addition of debits, but pointed to a pair of concerns.

One of these has to do with the network’s dollar limit, which caps same-day transactions at $25,000. Both financial institutions and companies that use the ACH argued this could be problematic for debits, which often involve much larger dollar sums than credits. While credits involve financial institutions pushing funds from, for example, buyers to sellers, debits allows sellers to pull funds from buyers’ accounts.

“Higher dollar limits, please,” implored Tina Miller, senior department leader at Edward Jones Investments, which sees using same-day debits to move money behind securities trades. “We have a lot of clients that trade in amounts over $25,000.”

Added Rebecca L. Wagner, senior compliance analyst at payroll processor Paychex Inc.: “The $25,000 threshold will be difficult. We will have to use other tools.” A $100,000 limit would be closer to ideal, Wagner said. She noted Paychex will mainly use same-day debits for reversals and collections purposes.

Indeed, banking executives said the $25,000 cap could force a number of financial institutions and corporate entities to stick with standard two-day settlement for some credits or debits that could have been handled same-day. “That limit is really going to impede some institutions from implementing same-day ACH for [what would have been] wire transfers,” observed Steven Bernstein, executive director for ACH, global ACH marketing and product, at JPMorgan Chase & Co.

“We’re hearing some businesses are impeded by that dollar limit and would like to see it raised,” noted Douglas Bondick, assistant vice president and ACH global product manager at Wells Fargo & Co.

Bondick, Bernstein, Miller, and Wagner spoke during separate sessions at the conference, which was organized by NACHA, the governing body for the ACH, and runs through Wednesday.

Aside from the dollar limit, the speakers also professed a strong preference for more settlement windows when same-day debits come on the scene. With the advent of same-day credits, the ACH network began processing with two windows, one in the morning and the other in the afternoon. With the volume expected to come onstream with debits, several speakers said they’d like to see more windows during the day to even out the flow and allow the West Coast, which is three hours behind the East Coast, to catch up. “More submission cycles, please,” added Miller to her request for a higher dollar cap.

Other speakers said more submission times would encourage more usage. “Our clients would use [same-day ACH] a lot more if we had more windows,” said Wagner. Same-day ACH volume totaled more than 13 million transactions worth almost $17 billion from Sept. 23 through the end of 2016, according to the latest figures from NACHA.

But faster processing for ACH transactions generally won plaudits from the speakers, some of whom said volume so far for same-day credits has been encouraging. “The positive thing is we’re seeing a higher volume of transactions on same-day than we thought we would,” said Bernstein. Wagner agreed. “There is a demand for faster payments,” she said.