Payments made via the Automated Clearing House (ACH) Network may have a lower profile than name brand credit cards and digital wallets. However, they are an imperative means of moving money between people, businesses, and their respective bank accounts. From settling bills with service providers to direct deposit of paychecks, ACH payments streamline credits and debits in often unseen ways. In 2016, more than 25 billion payments were made via ACH, accounting for $43 trillion in value. ACH payments can provide convenience and peace of mind to consumers while automating business processes and reducing the costs of payments acceptance.

The move to Same Day ACH

In 2015, the Electronic Payments Association® announced Same Day ACH, an amendment to the National Automated Clearing House Association’s (NACHA) Operating Rules designed to move payments faster. Historically, most ACH payments were settled within one to two business days. Same Day ACH was introduced to enable the same-day movement of money for almost any ACH transaction.

Who benefits from Same Day ACH?

Same Day ACH is designed to make payments faster, more efficient, less risky, and more cost-effective. In addition, NACHA identified specific use cases for Same Day ACH including the following:

• • Same-day payrolls – to pay hourly workers, make late or emergency payrolls, and allow employees faster access to their pay
  • Faster bill payments – to let customers make on-time payments the day their bills are due, helping to avoid late fees and penalties
  • Business-to-business payments – to facilitate the settlement of invoice payments made between trading partners

Same Day ACH implementation – a three phase approach

Same Day ACH is being implemented in three phases, with the third and final phase scheduled for Friday, March 16, 2018. Here is a synopsis of the two implementation phases that have already passed, and what to expect for Phase 3.

Phase 1: Effective September 23, 2016

Phase 1 of Same Day ACH applied to credits only (up to $25,000). The introduction of Phase 1 created two file submission widows at 10:30 am ET and 2:45 pm ET, with settlement times of 1:00 pm ET and 5:00 pm ET, respectively. Funds were made available to the receiver at the end of the business day when the file was submitted.

Phase 2: Effective September 15, 2017

Phase 2 allowed the same day settlement of debits in addition to credits. The file submission windows and settlement times reflected what was introduced in Phase 1.

Phase 3: Effective March 16, 2018

Phase 3 accelerates the availability of funds to the receiver. Phases 1 and 2 required that funds be available at the end of the day when the file was submitted. With the introduction of Phase 3, those funds must be available to the receiver by 5:00 pm (local time) on the day that the file was submitted.

What does Same Day ACH mean for consumers and businesses?

Same Day ACH is just one part of a larger movement toward faster, more efficient payments. The introduction of Same Day ACH can mean the following for billing and payments:

• Payroll can be expedited without the need to cut paper checks
• Disbursements (such as insurance claims) can be made on the same day, again eliminating the need to cut paper checks
• Customers can make bill payments on the day they are due, eliminating late fees and keeping their accounts current

NACHA reports that 75.1 million Same Day ACH payments were made in 2017, totaling more than $87.1 billion. What will the implementation of the third and final phase of Same Day ACH mean for payments going forward? We’ll keep you updated here on our blog.

For more information on Same Day ACH, visit NACHA’s resource center.

The Bottom Line: The third and final phase of NACHA’s Same Day ACH is effective March 16, 2018, and accelerates the availability of funds to the receiver. Same Day ACH offers benefits for consumers and businesses including expedited payroll, quicker disbursements, and faster bill payments.