ACH Modernization: Insights from the Experts

Automated Clearing House (ACH) modernization stands out as a pivotal area of development in payments. In a webinar hosted by Banking Exchange, industry experts Alex Romeo, Operations Strategy Vice President at Federal Reserve Financial Services, and Paul Steinbrecher, Director of Payments Consulting at Alacriti, discussed the future of ACH systems. Here, we capture the insights shared during the Q&A session where financial institution executives raised their questions about the future of ACH.  

Industry Agnosticism: A Core Principle

One of the first questions addressed to Romeo sought to identify if certain sectors or industries might benefit more from ACH modernization efforts than others. Romeo emphasized the industry-agnostic approach inherent in ACH network changes. Whether it's introducing same-day ACH, weekend processing, or extending same-day processing windows, the goal is to uplift the entire ecosystem. This inclusive approach ensures that enhancements benefit all participating organizations equally.

Integration with Modernized ACH Infrastructure

When asked about integrating current systems with a modernized ACH infrastructure, Steinbrecher highlighted the role of open API infrastructure. Alacriti’s Orbipay Payments Hub solution facilitates custom-built experiences on top of the ACH network's APIs, accommodating a wide array of unique use cases. Steinbrecher emphasized Alacriti’s commitment to providing tailored support for financial institutions, whether for new account funding, loan disbursement, or other specialized needs.

Support Across the Board

The audience wanted to know the types of banking services supported by modernized ACH connections. Steinbrecher clarified that their capabilities are designed to cater to both consumer and business use cases, including both Origination and Receipt of Entries (ODFI and RDFI) for debits and credits. This comprehensive support signifies the ACH network's adaptability to diverse banking requirements.

Weekend Processing

A great question about the possibility of ACH processing during the weekend provided a glimpse into the future of ACH. Romeo outlined the ongoing discussions among key stakeholders, including Nacha and ACH operators like the Federal Reserve and the Clearing House. Romeo didn’t rule out the possibility, explaining that those are early conversations that Nacha and both ACH operators are having. However, one important consideration is that ACH is still a batch store and forward system rather than Real-Time Gross Settlement (RTGS). So, Saturdays are predominantly used for system maintenance, testing, etc. Romeo explained that perhaps ACH could open up earlier on a Saturday, and it is a Nacha ACH network enhancement roadmap item. 

The Resilience of Batch Processing

The enduring reliance on batch processing for ACH transactions prompted queries about its continued viability. Romeo defended the batch store-and-forward system's efficiency and reliability, proven over decades of substantial volume growth and critical roles during events like the pandemic relief payments. The system's endurance, coupled with the emergence of instant payment channels, suggests that the ideal strategy is to maintain the ACH's foundational infrastructure while embracing new technologies where they add the most value.

To explore how ACH continues to evolve and remain a key payment network, watch the full webinar, Advancing into the Future: An Exploration of ACH Modernization, hosted by the Banking Exchange and featuring the Federal Reserve Financial Services and Alacriti.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.