Even before the first phase of Same Day ACH was implemented nearly five years ago in September 2016, Nacha’s Risk Management Advisory Group (RMAG) had been evaluating potential risk increases and decreases due to Same Day ACH. Were the doom and gloom scenarios justified, in which Same Day ACH would introduce massive amounts of risk? The answer from RMAG over the past five years has consistently been “no.”
The reality of almost five years of Same Day ACH processing has proven much different from some of the initial hyperbole. Same Day ACH began with credits in September 2016. Enhancements have followed every year since then, with the next one—an increased limit of $1 million per transaction—scheduled for March 2022.
Before each enhancement, RMAG evaluates the proposals, and assesses any potential risk increases or reductions. True, the increased speed of Same Day ACH increases some operational risks because of the speed and frequency of settlement. However, that same speed and frequency of settlement also provides additional opportunities for financial institutions to recover from operational issues during the same day. That, in turn, minimizes the impact on consumers and corporate users of the ACH Network.
About two-to-four months following each enhancement, Nacha conducts “post-implementation” surveys to give financial institutions the opportunity to assess what they are seeing, or not seeing, in their internal reporting. Much of the focus is on whether each enhancement to Same Day ACH has resulted in higher levels of fraud.
Each survey Nacha asks the following about fraud related to that phase or enhancement:
1. Have you seen an increase in Same Day ACH fraud that is directly attributable to the enhancement that has just been implemented?
2. If yes, is the increase measurable or anecdotal?
Nacha has never received a “yes” response to the fraud questions on any of the surveys. This includes a survey just completed on the implementation of the third daily Same Day ACH processing window, which will be reported on more fully in the near future. While not every financial institution always responds, Nacha generally hears from enough that those institutions are responsible for between 60% and 70% of all commercially originated ACH Network volume.
In response to the question, “Is Same Day ACH riskier than traditional Next Day ACH?” it can be argued that the answer is “no.” In many respects Same Day ACH actually reduces a financial institution’s risk profile compared to traditional ACH.
Having multiple Same Day ACH settlements each day:
1. Reduces the risk of daylight overdrafts for both clients and their financial institutions.
2. Allows the ODFI to more closely manage exposure limits of their clients by updating their exposure with each ACH processing cycle.
3. Reduces certain return risk for Originators and ODFIs since returns can be processed in any ACH settlement window. Getting return items back to the Originator faster allows the Originator to be working with their partners sooner to resolve the issues.
4. Allows ODFIs the opportunity to recover from certain types of errors during the same day, reducing the impact of that error on corporate clients and consumers.
Daily life has its share of risks. But when it comes to payments, the safety and reliability of Same Day ACH gives users one less thing to worry about.