Request for Comment - Expanding Same Day ACH

DEADLINES: January 26 and February 23, 2018: NACHA invites comments on proposed rules to expand Same Day ACH. Same Day ACH is available as an option to move payments faster for most ACH credits and debits, and at current volume is on pace for 120 million transactions annually.  Strategically, Same Day ACH is a key component of NACHA’s roadmap to move the ACH Network forward for financial institutions and their customers. Feedback from financial institutions and ACH end-users already suggests that many organizations could make greater use of Same Day ACH with changes to its features.

NACHA is issuing this Request for Comment to generate industry feedback on proposals to:

  1. Add a third Same Day ACH processing window that expands access to later in the day;
  2. Provide faster funds availability to receivers of both Same Day and non-Same Day ACH credits;
  3. Raise the per-transaction dollar limit on Same Day ACH transactions to $100,000;
  4. Explore the industry’s interest in ACH processing on weekends and holidays. 

The first three topics are proposals to amend the NACHA Operating Rules, and NACHA is accepting comments on them through Friday, January 26, 2018. The RFC survey maybe accessed here: https://www.surveymonkey.com/r/MJ8FLW9

The fourth topic is a Request for Information to explore industry interest; responses on that topic are requested by Friday, February 23, 2018. The RFI survey maybe accessed herehttps://www.surveymonkey.com/r/BGDZ6LY

NACHA encourages responses from all ACH Network participants and interested parties. Organizations are encouraged to gather and provide feedback on all aspects of these proposals, including any that have impact beyond ACH operations and product management, such as wire operations, and liquidity and reserve management. For convenience, all the survey questions are provided within a Word document located under Related Materials to assist respondents in gathering information from within their organizations.

For additional information on the proposals please refer to the documents under Related Materials to the right of this page. 

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Detailed Information

NACHA is issuing this Request for Comment to generate industry feedback on three proposals to:

  • Add a third daily Same Day ACH processing window 
  • Provide faster funds availability to receivers of both Same Day and non-Same Day ACH credits
  • Raise the per-transaction dollar limit on Same Day transactions to $100,000

For additional information on the proposals please refer to Expanding Same Day ACH under Related Materials to the right of this page.
 

Adding a Third Daily Same Day ACH processing window – the proposal:

The ACH Operators would establish a third, daily Same Day ACH processing and settlement window

  • ODFIs would be able to submit files of SDA transactions until 5:15 p.m. ET / 2:15 p.m. PT
  • RDFIs would receive files of SDA transactions by 6:00 p.m. ET / 3:00 p.m. PT
  • Interbank settlement would occur at 6:30 p.m. ET / 3:30 p.m. PT
  • An RDFI would make funds available for SDA credits in this new SDA processing window no later than the end of its processing day
  • Eligibility for SDA would be the same as currently exists – all credits and debits would be eligible for SDA processing, except international ACH transactions (IATs) and transactions over $25,000 

The times cited here are best estimates. The exact ACH Operator processing schedules are not determined by the NACHA Operating Rules, and the inclusion of proposed ACH Operator schedules and other functions in this proposal should not be interpreted as an endorsement by either ACH Operator.
 

Providing faster funds availability to receivers of both Same Day and non-Same Day ACH credits – the proposal:

For SDA credits received in the first SDA window, funds would be required to be made available by 1:00 p.m. RDFI local time

For non-SDA credits:

  • For credits received prior to 5:00 p.m. RDFI local time on the previous banking day, funds would be required to be made available by 9:00 a.m. local time on Settlement Day (This is similar to the existing rule on availability for PPD credits; however, the current “opening of business” language is changed to “9:00 a.m. local time”)
  • For credits received after 5:00 p.m. RDFI local time on the previous banking day, funds would be required to be made available by 1:00 p.m. local time on Settlement Day

All funds availability times are “no later than” - an RDFI can exceed the minimum requirement
 

Raising the per-transaction dollar limit on Same Day transactions to $100,000 – the proposal:

NACHA proposes to increase the SDA per-transaction dollar limit from $25,000 to $100,000

At the current dollar amount, approximately 98 percent of ACH transactions are eligible for Same Day ACH processing

  • An additional 1.3% of ACH volume would become eligible for SDA
  • For B2B payments, an additional 7% would become eligible

This limit was incorporated into the original rule as a risk management measure

  • The industry would gain experience with SDA transactions while transacting relatively low dollar amounts
  • Business end-users as receivers of SDA transactions also would be able to adapt to new receipt times at relatively low dollar amounts

Respondents have until February 23, 2018 to provide comments on this topic. 


Exploring the industry’s interest in ACH processing on weekends and holidays.

Although not a formal proposal at this time, NACHA is asking ACH participants whether there would be benefits from the availability of ACH processing on weekends and holidays.

  • Currently, there is no interbank settlement of ACH transactions on weekends and holidays because these are not Federal Reserve banking days. However, deferred settlement until Mondays (or Tuesdays on three-day weekends) can cause hardships for cases such as consumer payroll payments and bill payments, and account holders might not have the best information available about their true available balances.
  • Would these situations be improved by having ACH processing occur on weekends and holidays?  Would they be improved with only the exchange of ACH files, if interbank settlement still occurs on the next banking day?

What is the industry’s interest in, and what is the feasibility of, exchanging ACH transactions on weekend and holidays?

 

For additional information on the proposed modifications to the NACHA Operating Rules please refer to Proposed Modifications to the Rules - Expanding Same Day ACH under Related Materials to the right of this page.


Adding a Third Same Day ACH processing window – proposed modifications to the Rules:


APPENDIX THREE- ACH RECORD FORMAT SPECIFICATIONS 

Subpart 3.2.2 Glossary of Data Elements

Company Descriptive Date: 6 Positions – Company/Batch Header Record – Optional (ACK, ADV, ARC, ATX, CCD, CIE, CTX, DNE, ENR, MTE, POP, POS, PPD, RCK, SHR, TEL, TRC, TRX, WEB, XCK, Returns, dishonored Returns, contested dishonored Returns, COR, refused COR)

Except as otherwise noted below, the Originator establishes this field as the date it would like to see displayed to the Receiver for descriptive purposes. This field is never used to control timing of any computer or manual operation. It is solely for descriptive purposes. The RDFI should not assume any specific format. Examples of possible content in this field are “011311,” “01 11,” “Jan 13,” “JAN 11,” etc.

Same Day Entries: At its discretion, an ODFI may require an Originator to use this field to further demonstrate intent for same-day processing and settlement. ODFIs that choose to do so should use the convention “SDHHMM”, where the “SD” in positions 64-65 denotes the intent for same-day settlement, and the hours and minutes in positions 66-69 denote the desired settlement time using a 24-hour clock. When electing to use this convention, the ODFI would validate that the field contains either “SD1300” for settlement desired at 1:00 p.m. ET, “SD1700” for settlement desired at 5:00 p.m. ET, or “SD1830” for settlement desired at 6:30 p.m. ET, in accordance with the settlement times offered by the ACH Operators. ACH Operators and RDFIs are not required to take any action with respect to the presence or absence of these optional same-day indicators.


Providing faster funds availability to receivers of both Same Day and non-Same Day ACH credits – proposed modifications to the Rules:


ARTICLE THREE – RIGHTS AND RESPONSIBILITIES OF RDFIS AND THEIR RECEIVERS

Section 3.3 Timing Requirements for RDFI to Make Credit and Debit Entries Available

Subsection 3.3.1 General Rules for Availability of Credit Entries to Receivers

An RDFI’s obligation to make funds available under this Subsection is subject to its right to return the Entry under these Rules.

An RDFI that reasonably suspects that a credit Entry is unauthorized is exempt from the funds availability requirements of this Subsection. An RDFI invoking such an exemption must promptly notify the ODFI.

Subsection 3.3.1.1 Availability of Credits That Are Not Same Day Entries

For a credit Entry that is made available to the RDFI by its ACH Operator by 5:00 p.m. (RDFI’s local time) on the Banking Day prior to the Settlement Date, the RDFI must make the amount of the credit Entry available to the Receiver for withdrawal no later than 9:00 a.m. (RDFI’s local time) on the Settlement Date.

For a credit Entry that is made available to the RDFI by its ACH Operator after 5:00 p.m. (RDFI’s local time) on the Banking Day prior to the Settlement Date, the RDFI must make the amount of the credit Entry available to the Receiver for withdrawal no later than 1:00 p.m. (RDFI’s local time) on the Settlement Date.

Subsection 3.3.1.2 Availability of Credits That Are Same Day Entries

For a credit Same Day Entry received in the first same-day processing window, an RDFI must make the amount of the credit Entry available to the Receiver for withdrawal no later than 1:00 p.m. (RDFI’s local time) on the Settlement Date of the Entry.

For a credit Same Day Entry received in the second same-day processing window, an RDFI must make the amount of the credit Entry available to the Receiver for withdrawal no later than 5:00 p.m. (RDFI’s local time) on the Settlement Date of the Entry.

For a credit Same Day Entry received in the third same-day processing window, an RDFI must make the amount of the credit Entry available in the Receiver’s account no later than the completion of the RDFI’s processing for that Settlement Date. An RDFI is not required to make such funds available for withdrawal on the Settlement Date.

An RDFI whose local time is Atlantic Time may use Eastern Time in meeting these requirements.

An RDFI located east of the Atlantic Time Zone and west of the International Date Line must make the amount of a credit Same Day Entry received in any same-day processing window available to the Receiver for withdrawal no later than the opening of business on the Banking Day following the Settlement Date of the Entry.
 

Raising the per-transaction dollar limit on Same Day transactions to $100,000 – proposed modifications to the Rules:


ARTICLE EIGHT – DEFINITIONS OF TERMS USED IN THESE RULES

SECTION 8.99 “Same Day Entry”
 
An Entry for which the Effective Entry Date is the same Banking Day as the date on which the Entry is Transmitted by the ODFI to its ACH Operator, and is Transmitted by the ACH Operator’s deadline for same-day processing and settlement. A Same Day Entry must be for an amount of $100,000 or less. An IAT or ENR Entry cannot be a Same Day Entry. For purposes of fulfilling its obligations under these Rules, an RDFI may rely on the Settlement Date of an Entry, regardless of the Effective Entry Date. An Entry with a stale or invalid Effective Entry Date will also be a Same Day Entry if it is Transmitted by the ODFI to its ACH Operator by the ACH Operator’s deadline for same-day processing and settlement, and is otherwise eligible for same-day processing and settlement.
 

APPENDIX THREE- ACH RECORD FORMAT SPECIFICATIONS

Subpart 3.2.2 Glossary of Data Elements
 
Settlement Date: 3 Positions – Company/Batch Header Record – Inserted by Receiving ACH Operator (all batches)
 
The Settlement Date (a 3-digit Julian date) for a batch of Entries is inserted by the Receiving ACH Operator. This is the date on which the Participating DFI or its correspondent is scheduled to be debited or credited by the Federal Reserve.
 
The Settlement Date inserted by the Receiving ACH Operator is the same as the Effective Entry Date, except as noted below.

In the following situations, the Receiving ACH Operator will insert the Banking Day following the Banking Day of processing as the Settlement Date (i.e., the next Banking Day): 

  1. The Effective Entry Date and the Originating ACH Operator’s processing date are the same, but the Entry is received by the Receiving ACH Operator after its deadline for same-day settlement.

  2. The Effective Entry Date and the Originating ACH Operator’s processing date are the same, but the Entry is for an amount greater than $100,000.

  3. The Effective Entry Date and the Originating ACH Operator’s processing date are the same, but the Entry bears the IAT Standard Entry Class Code.

  4. The Entry bears the ENR Standard Entry Class Code.

Entries with invalid or stale Effective Entry Dates will be settled at the next available settlement opportunity.
 
Return Entries, dishonored Return Entries, and contested dishonored Return Entries are settled by the ACH Operator no earlier than the Effective Entry Date contained within the original Entry, as it appears in the Return Entry Company/Batch Header Record. The return of an Entry that contains an invalid or stale Effective Entry Date will be settled by the ACH Operator at the next available settlement opportunity (i.e., the Banking Day of processing or the next Banking Day).
 
Notifications of Change will be settled at the next available settlement opportunity, (i.e., the Banking Day of processing or the next Banking Day).
 

APPENDIX TEN – RULES ENFORCEMENT

SUBPART 10.4.6 ACH Rules Enforcement Panel

SUBPART 10.4.6.1 Selection of Enforcement Panel
The National Association will maintain a list of members of the ACH Rules Enforcement Panel that have been nominated in accordance with the procedures established by the National Association.

SUBPART 10.4.6.2 Responsibilities of Enforcement Panel
The ACH Rules Enforcement Panel, in accordance with these rules, is the final authority regarding each of these issues:

  • the imposition of any fines or penalties recommended by the National Association;

  • instances in which the National Association believes the time frames and Resolution Dates asserted by the respondent Participating DFI as necessary to resolve the problem causing a rules violation are excessive;

  • instances in which the National Association believes an ODFI, Originator, or Third-Party Sender has originated Entries without proper authorization in accordance with these Rules;

  • instances in which the National Association believes an ODFI, Originator, or Third-Party Sender has attempted to evade the limitations on Reinitiation;

  • instances in which the National Association recommends, after the inquiry process, that an ODFI be required to reduce an Originator’s or Third-Party Sender’s applicable return rate below the Administrative Return Rate Level and/or the Overall Return Rate Level;

  • instances in which the National Association believes an ODFI, Originator, or Third-Party Sender has attempted to evade the $100,000 per-Entry limitation on Same Day Entries;

  • rules violations that the National Association believes constitute Class 1, Class 2, or Class 3 Rules Violations; and
     
  • ​situations in which the National Association determines that it is unclear whether a rules violation has occurred.
     

For additional information on the proposals please refer to Expanding Same Day ACH under Related Materials to the right of this page. 

Adding a Third Daily Same Day ACH processing window – impacts to consider:

To receive SDA files in the later window and make funds available, some RDFIs might have to extend back office hours, or increase or redeploy staffing during these hours - Any such impacts could be mitigated through greater automation of ACH file processing

Corporate ACH receivers might need to modify processes for applying payments received, or modify other end-of-day processes

Just as with Phases 1 and 2, a third SDA processing window could have an impact on various types of risk

  • Operational risk

    • Certain end-of-day processes might be compressed  

    • ACH Operators might not be able to accommodate requests for extensions 

    • A total of 4 daily ACH settlements provides more opportunities to recover from errors, missed deadlines, and outages  

  • Transaction/return risk

    • Faster ACH debits could have a different return profile and rate - positive or negative  

    • RDFIs have additional opportunities to send returns faster 

    • ODFIs and their Originators benefit from receiving faster returns  

    • Because the last SDA window would allow both forward and return entries, returns of SDA transactions received in this window could not be settled until 8:30 a.m. the next day 

  • Settlement risk

    • More frequent interbank settlement reduces settlement risk between counterparties  

    • Deferred settlement for SDA transactions as described in the "Alternatives" section on slide 19 could prevent counterparties from realizing this benefit   

  • Credit risk

    • More frequent interbank settlement reduces an ODFIs credit risk with its ACH Originators  

    • Deferred settlement for SDA transactions as described in the "Alternatives" section on slide 19 could increase an RDFI's credit risk with its ACH Receivers  

  • Fraud risk

    • Time available to conduct risk management screening is compressed  

    • To date, financial institutions have not seen an increase in fraud solely due to SDA   

The proposal to expand Same Day ACH assumes, and is dependent upon, the Federal Reserve extending the operating hours of its National Settlement Service to 7:00 p.m. ET / 4:00 p.m. PT

  • NACHA has formally requested such an extension to support SDA

  • As of the issuance of this Request for Comment, the Federal Reserve has not stated how and when it might extend settlement to support expanded SDA

Extended operating hours for interbank settlement potentially could have other impacts

  • Currently, NSS is open within the operating hours of Fedwire, which currently cuts-off at 6:30 p.m. ET for Settlement Payment Orders

  • This proposal assumes that Fedwire hours for Settlement Payment Orders would need to be extended until after the time of interbank settlement (e.g., until 7:30 p.m. ET)

  • The extension of Fedwire hours, whether just for Settlement Payment Orders or for all wire transfers, would have impacts beyond ACH

 

Raising the per-transaction dollar limit on Same Day transactions to $100,000 - impacts to consider:


RDFIs and their customers would be required to receive SDA transactions up to the dollar limit

Higher per-transaction dollar limits could be more impactful later in the day, especially with the new SDA processing window

  • Target distribution of SDA files to RDFIs in this new window is 6:00 p.m. ET/ 3:00 p.m. PT 

    • What impacts would this have on end-of-day processes?

For ODFIs, customers might be able to initiate higher-dollar credits that move funds out faster - What is the impact on screening, or recovery when necessary?

Coming soon