May 15, 2019

ACH Will Remain Part of the ‘Backbone of U.S. Payment System’


Michael W. Kahn

Michael W. Kahn


ORLANDO, Fla.—ACH is, and will remain, a vital part of the nation’s payment system, a senior Federal Reserve official told a Nacha conference.

“We still expect the ACH Network to continue to be part of the backbone of the U.S. payment system. At the Federal Reserve we are still committed to that,” said Nell Campbell-Drake, vice president of the Federal Reserve Bank of Atlanta.

“We’re investing in our technology to make sure that we’re able to continue to support the changes that are taking place in the ACH Network.”

Campbell-Drake made that clear during a Smarter. Faster. Payments 2019 session looking at upcoming enhancements to Same Day ACH.

Starting Sept. 20, funds for many Same Day ACH credits will be available sooner in the day. And as Michael Herd, Nacha senior vice president, ACH Network administration, noted, “Faster funds availability is generally a very positive experience for the receiver of those funds. Who would object to getting money sooner?” 

Herd cited several strong use cases, including same day payrolls, in which money could be made available to employees “by the middle of the day, rather than waiting until the end of the business day.”

The dollar limit per Same Day ACH transaction quadruples to $100,000 on March 20, 2020. 

“As you think about the transactions that flow through the ACH Network now, Nacha has stated that about 98 percent of those transactions qualify for Same Day ACH, even at the $25,000 limit. But as we increase that to $100,000, there’s about 1.3 percent of additional transactions going through the ACH Network that will now qualify,” said Campbell-Drake. Insurance policyholders with large claims are among those who will benefit.  

In the business-to-business space, an even greater percentage—about 8 percent—of additional ACH payments will become eligible for Same Day ACH.

In March 2021, the period for submitting same day transactions to the ACH Network will be extended by two hours. This requires a corresponding change in the operating hours of the Federal Reserve Banks’ National Settlement Service and Fedwire Funds Service to enable interbank settlement. The Fed issued a request for comment May 9, and Nacha issued a statement of support

Alex Romeo, vice president, EPN product manager at The Clearing House, urged all concerned parties to take the time to weigh in, noting the Federal Reserve Board of Governors goes through “a very diligent process.”

“They read each and every comment letter, sometime multiple times. Sometimes they’ll reach out to the respondent to get a clarification on what they meant, so that they can understand better what the impact will be,” said Romeo.

In the meantime, he promised Nacha, The Clearing House and the Fed will continue collaborating “in anticipation that some iteration of a third window will happen.”

“It’s in our best interest as infrastructure providers to do this,” said Romeo. “We cannot sit and wait.”

Learn more at Nacha’s Same Day ACH Resource Center.