Increasing the Same Day ACH Dollar Limit
This rule will continue to expand the capabilities of Same Day ACH. Increasing the Same Day ACH dollar limit to $1 million per payment is expected to improve Same Day ACH use cases, and contribute to additional adoption.
Increasing the dollar limit has been a frequently asked for change by ACH end-users. Most recently, a summer 2020 survey of corporate ACH end-users resulted in recommendations for Same Day ACH:
- Increase or remove dollar limits
- Expand processing hours and days
The dollar limit increase in March 2020 had an immediate impact on the use of Same Day ACH
- The average amount of a Same Day ACH payment increased by 46% from February to April 2020
- Overall Same Day ACH dollar volume increased by 86% in 2020
This rule will increase the Same Day ACH dollar limit to $1 million per payment.
This rule will apply to all Same Day ACH entries; consumer and business payments, credits and debits.
The effective date is March 18, 2022
Risk monitoring - Nacha frequently surveys financial institutions about Same Day ACH and risk management. In the most recent survey following the March 2020 dollar limit increase, zero financial institutions responded that they had experienced an increase in fraud that is directly attributable to the increase in the Same Day ACH dollar limit.
- All of the responding financial institutions allow their ACH origination clients to originate Same Day ACH payments up to the new $100,000 limit
- Almost 70% said they have some clients who, as a normal part of their business, regularly initiate transactions above the previous $25,000 limit
Anticipated Benefits - Increasing the dollar limit is anticipated to contribute to ongoing adoption of Same Day ACH.
Existing use cases would be improved by making a greater percentage eligible for Same Day ACH, such as for:
- Business-to-business payments
- Tax payments
- Payroll funding
- Insurance claim payments
- Merchant settlement
- Same Day Reversals of standard ACH payments
- Business continuity - recovery from missed deadlines or outages
A greater percentage of ACH dollar volume becomes eligible for Same Day ACH
- The percentage of ACH dollars eligible for Same Day ACH would more than double
- An additional 3.5% of B2B payments will become eligible for Same Day ACH
A dollar limit increase would result in a larger amount of dollars settling at several times throughout the day – 1:00 p.m.; 5:00 p.m., and 6:00 p.m. (all in ET).
All ACH participants should understand and plan for these dollar flows within their organizations.
- ODFIs need to determine whether to offer higher dollar limits to Same Day ACH Originators
- Higher Same Day ACH dollar limits might impact a financial institution’s assessment of its customers’ credit risks
The ACH Operators will edit for the $1 million limit for Same Day ACH transactions, and will assign next day settlement to any transactions above the limit.
The limit on large-dollar transactions (those ACH Entries over $1 million) applies to individual transactions; i.e., a single Same Day ACH transaction can not be for more than $1 million. There is no similar limit on the aggregate value of a batch of Same Day ACH transactions, or a file of Same Day ACH transactions. Entries submitted in a same-day processing window that are over $1 million will not be rejected by the ACH Operator, but will be processed for next-day settlement in the next available processing window.
As with previous Same Day ACH dollar limits, transactions may not be restructured to evade the $1 million limit. For example, if a business has a loan payment of $1.5 million due, that payment would not be eligible for Same Day ACH and should not be divided and sent as multiple same-day Entries in order to avoid the per-transaction dollar limit. However, if a business is paying multiple invoices from the same supplier that each amount to $1 million or less, each invoice could be paid using a distinct Same Day ACH transaction. Originators should be educated to avoid attempts at structuring Entries in order to evade the per-transaction dollar limit. Since evasion can be a very fact specific inquiry, Nacha will consider evasion issues on a case-by-case basis.
In December 2020, Nacha issued a Request For Comment for a proposal to increase the Same Day ACH dollar limit on a schedule of three increases over three consecutive years. By the third increase, the Same Day ACH dollar limit would have been eliminated. The increases would apply to all Same Day ACH payments; Consumer and business payments, credits and debits
The proposal would have given Nacha the ability to pause the scheduled effective dates for up to 6 months if operational, risk, or fraud issues arise. A 60-day notice would be given in the event of a pause.
Responses to the RFC:
107 responses were received to the RFC, including 68 financial institutions. FI respondents were well distributed among asset sizes
91% of respondents agreed that the current Same Day ACH dollar limit should be raised
85% agreed that all Same Day ACH entries should have the same limit
60% said new/expanded use cases would be created by raising the dollar limit, such as:
Payroll file funding; urgent large dollar vendor payments; auto dealer payments; corporate account transfers and cash management; and tax payments
Insurance claim payments
53% of respondents indicated a higher dollar limit would increase or significantly increase their usage of Same Day ACH
82% said impacts to their ACH operations and technology would be minimal-to-moderate
Respondents rated the impact on risk management as somewhat more impactful, though 60% still rated it as minimal-to-moderate
71% of all respondents agreed that Same Day ACH payments should ultimately have the same limits as non-same day payments.
Nearly 70% of respondents supported raising the dollar limit in multiple scheduled increases.
Many respondents supported an increase to $1 million per eligible entry, but not subsequent increases without re-evaluation
Many respondents commented in support of an increase in March 2022, but not scheduled future increases
Changes from the original proposal in the RFC:
This rule provides for a single increase of the limit to $1 million per entry, instead of three increases over three years
- A sufficient percentage of respondents provided feedback and commentary that a single, incremental increase creates value for users of Same Day ACH, but that future increase should be deliberated after evaluation of this initial increase
- Without multiple, future increases, there is not a need to provide for the ability to pause the schedule