Same Day ACH: Moving Payments Faster (Phase 3)
New capabilities of Same Day ACH become effective over phases to allow financial institutions and businesses to acclimate to a faster processing environment, as well as to ease the implementation effort. Beginning March 16, 2018, RDFIs will be mandated to make funds available from same day ACH credits (such as payroll Direct Deposits) to their depositors by 5:00 PM at the RDFI’s local time.
The Rule enables the option for same-day ACH payments through additional ACH Network functionality, without affecting previously available ACH schedules and capabilities:
Originating financial institutions (ODFIs) are able to submit files of same-day ACH payments through two additional clearing windows provided by the ACH Operators (Note: The actual ACH Operator schedules are not determined by the Nacha Operating Rules.):
A morning submission deadline at 10:30 AM ET, with settlement occurring at 1:00 PM.
An afternoon submission deadline at 2:45 PM ET, with settlement occurring at 5:00 PM.
Virtually all types of ACH payments, including both credits and debits, are eligible for same-day processing. Only international transactions (IATs) and high-value transactions above $25,000 are not eligible. Eligible transactions account for approximately 99 percent of current ACH Network volume.
All RDFIs are required to receive same-day ACH payments, thereby giving ODFIs and Originators the certainty of being able to send same-day ACH payments to accounts at all RDFIs.
Learn more about Same Day ACH with our Resource Center.
The Rule is based on a solid foundation of economic research on the use cases for Same Day ACH.
All consumers, businesses, government entities and financial institutions that use the ACH Network to move money between bank accounts will benefit from the option to move ACH payments faster.
Nacha projects that ACH Originators would generate approximately 1.4 billion same-day ACH payments annually as of ten years after full implementation and rollout, primarily for transactions that can be initiated before 2:45 PM ET on business days (not on weekends or holidays), and that do not require real-time functionality.
Using an expert, third-party economist, Nacha assessed 10 primary use cases for Same Day ACH. Significant use cases for Same Day ACH include:
Same-day payrolls, supporting business’ needs to pay hourly workers, and providing flexibility for late and emergency payrolls and missed deadlines; and enabling employees to have faster access to their pay in these cases;
Business to-Business payments, enabling faster settlement of invoice payments between trading partners, and including remittance information with the payments;
Expedited bill payments using both ACH credits and debits, enabling consumers to make on-time bill payments on due dates, and providing faster crediting for late payments; and,
Account-to-account transfers, providing faster crediting for consumers who move money among various accounts they own.
The following changes to the Nacha Operating Rules will become effective on March 16, 2018.
SUBSECTION 184.108.40.206 General Rule for Availability of Credits
For a credit Entry that is not a Same Day Entry, an RDFI must make the amount of the credit Entry received from its ACH Operator available to the Receiver for withdrawal no later than the end of the Settlement Date of the Entry, subject to its right to return the Entry under these Rules.
For a credit Same Day Entry, an RDFI must make the amount of the credit Entry available to the Receiver for withdrawal no later than 5:00 p.m. in the RDFI’s local time on the Settlement Date of the Entry, subject to its right to return the Entry under these Rules, and except as noted below.
An RDFI in the Atlantic Time Zone must make the amount of a credit Same Day Entry available to the Receiver for withdrawal no later than 5:00 p.m. Eastern Time on the Settlement Date of the Entry, subject to its right to return the Entry under these Rules.
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 available to the Receiver for withdrawal no later than the opening of business on the Banking Day following the Settlement Date of the Entry, 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 these requirements, subject to applicable Legal Requirements. An RDFI invoking such an exemption must promptly notify the ODFI.
Same Day ACH Impacts by Party
Offering Same Day ACH products and services is optional for ODFIs. For those ODFIs that choose to offer Same Day products and services, the following impacts should be considered:
Discuss new file submission and delivery schedules with ACH Operator
Review and revise internal processing schedules and procedures to accommodate new windows for Same Day Entries.
Review downstream applications and systems that may be impacted by Same Day Entries.
- Communicate with Originators and Third-Parties on Same Day Entries
- Determine customers and business models to offer Same Day
- Discuss proper use of the Effective Entry Date and impacts of improper Effective Entry Dates. Discuss alternatives if an Originator is not able to properly use Effective Entry Dates. If desired, discuss use of an optional indicator for Same Day entries
- Discuss eligibility requirements for Same Day Entries
Develop procedures for holding entries that are received from an Originator in time for a same day window but that is not the Originator’s desire
ODFIs will receive information from their ACH Operator regarding collection of the Same Day Entry fees.
Receipt of Same Day Entries is not optional for RDFIs. RDFIs should consider the following potential impacts:
RDFIs should discuss new file delivery schedules with ACH Operator
RDFIs should review procedures and resources for processing files in the new delivery windows
RDFIs should process entries based on the Settlement Date provided by the ACH Operator. RDFIs do not need to review Effective Entry Date or any other indicator to determine processing.
RDFIs do not need to determine same day eligibility for processing.
Determine whether to use the new same-day processing windows to send returns and NOCs. Returns will be allowed, but not required, to be processed on the same day. For a Same Day ACH entry, since settlement is one day sooner, the return deadline is also one day sooner.
Phase 3 will require RDFIs to provide funds availability at 5:00 pm local time for same day credit entries.
Review downstream applications and systems that may be impacted by Same Day Entries.
RDFIs will receive information from their ACH Operator regarding receipt of the Same Day Entry fees.
- Talk to your FI to determine if Same Day is appropriate and cost effective
- Discuss new file submission and exception resolution cut-off times
The Rule will enable the option for same-day ACH payments through new ACH Network functionality, without affecting existing ACH schedules and capabilities:
Originating financial institutions (ODFIs) will be able to submit files of same-day ACH payments through two new clearing windows provided by the ACH Operators :
- A morning submission deadline at 10:30 AM ET, with settlement occurring at 1:00 PM.
An afternoon submission deadline at 2:45 PM ET, with settlement occurring at 5:00 PM.
Virtually all types of ACH payments, including both credits and debits, will be eligible for same-day processing. Only international transactions (IATs) and high-value transactions above $25,000 will not be eligible. Eligible transactions account for approximately 99 percent of current ACH Network volume.
All RDFIs will be required to receive same-day ACH payments, thereby giving ODFIs and Originators the certainty of being able to send same-day ACH payments to accounts at all RDFIs.
RDFIs will be mandated to make funds available from same day ACH credits (such as payroll Direct Deposits) to their depositors by 5:00 PM at the RDFI’s local time.
To allow financial institutions and businesses to acclimate to a faster processing environment, as well as to ease the implementation effort, these new capabilities will become effective over three phases beginning in September 2016.
The rule will become effective in three phases:
- Phase 1 will become effective on September 23, 2016 (credit entries with funds available at end of RDFI processing day);
- Phase 2 will become effective on September 15, 2017 (credit and debit entries with funds available at end of RDFI processing day);
- Phase 3 will become effective on March 16, 2018 (credit and debit entries with funds available at 5:00 pm RDFI local time).
Spreading implementation across three phases will ease the industry’s implementation effort, and allow the industry to acclimate to a faster processing environment with same-day ACH credits prior to processing same-day ACH debits.
Same Day ACH transactions will be identified and processed by the ACH Operator using that day’s date in the Effective Entry Date field of the batch of Same Day ACH transactions and meeting the ACH Operator processing deadline. If the entry contains a stale or invalid date in the Effective Entry Date field, the Operator will process the entry in the next available window, which could be same day or next day.
ODFIs at their discretion may require their Originators to further show intent for same-day settlement using an optional, yet standardized, same-day indicator in the Company Descriptive Date field. The Company Descriptive Date field (5 record, field 8) is an optional field with 6 positions available (positions 64-69). Currently, the Rules provide that the “Originator establishes this field as the date it would like to see displayed to the Receiver for descriptive purposes.” Nacha recommends that, as desired, the content of this field be formatted using 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 should validate that the field contains either “SD1300” for settlement desired at 1:00 PM ET, or “SD1700” for settlement desired at 5:00 PM ET.
Initially RDFIs will need to make funds available at the end of their processing day. By the Phase 3 implementation date, all RDFIs will be required to make available funds from same-day ACH credits no later than 5:00 PM at the RDFI’s local time. This is to ensure that the recipients of same-day ACH credits have access to funds in their accounts by the end of the business day. This functionality is important in supporting use cases such as payroll, in which it is critical that an employee be able to withdraw cash on payday. RDFIs may make funds available earlier at their discretion.
In Phase Three of Same Day ACH, most RDFIs will receive their last files that could contain Same Day credit Entries an hour or more before they are required to make funds available to their Receivers for withdrawal at 5:00 p.m. local time, giving them adequate time for internal processing and posting to Receivers’ accounts. However, for RDFIs located east of the continental U.S. and west of the International Date Line, time zone changes make it impossible for the ACH Operators to distribute files containing Same Day Entries in advance of the time in which those RDFIs must meet their 5:00 p.m. local time funds availability requirement. In other words, it is already 5:00 p.m. local time or later before the last files containing Same Day Entries are made available to those RDFIs. RDFIs in the Atlantic Time Zone will be required to make funds available to Receivers for withdrawal by 5:00 p.m. Eastern Time (that is, by 6:00 p.m. in Atlantic Time). RDFIs east of Atlantic Time and west of the International Date Line (includes Guam and the Northern Mariana Islands) will be required to make funds available to their Receivers for withdrawal no later than the opening of business on the banking day following the settlement date of the entry.
Corporate Receivers of same-day ACH credits will be required to credit a customer’s account for a same day payment as of the settlement date of the same day entry. The corporate has a reasonable amount of time to reflect that payment in the customer’s account.
Faster velocity of payments is expected to introduce risks that must be managed and mitigated. A per- transaction dollar limit is one way to mitigate risk. Financial institutions and businesses will also have to adjust their end-of-day balance forecasting and funding, and the dollar limit is a way to limit the impact. Currently, more than 99% of ACH transactions are under $25,000, so the overall impact of the same-day limit is expected to be modest.
The ACH Operators will edit for the $25,000 limit for Same Day ACH transactions, and will assign next day settlement to any transactions above the limit.
Any account that is able to receive ACH entries today could receive Same Day ACH entries.
A Same Day Entry Fee of 5.2 cents will be paid from the ODFI to the RDFI for each Same Day ACH transaction. Collection and disbursement of Same Day Entry Fees for ODFIs and RDFIs will be handled by the ACH Operators through monthly billing. In billing for the Same Day Entry fees, the ACH Operators will round each financial institution’s monthly statement charge or credit to the nearest cent. For example, an ODFI that originates 13 same-day transactions in September 2016 would be billed $0.68 via its monthly ACH Operator billing statement (i.e., 13 same-day transactions * $0.052 = $0.676, which is rounded to $0.68).
For non-monetary transactions, there are no funds to settle. Generally, these transactions will benefit from same-day processing. Under this rule, most of these transactions will be eligible for same-day processing beginning with Phase 1 of implementation.
The eligible non-monetary transactions include:
- Prenotifications for future credits (Prenotifications for future debits will become eligible for same-day processing in Phase 2)
- Remittance information (using CCDs and CTXs)
- Notifications of Change (NOCs) NOCs are transmitted from the RDFI to the ODFI and will not incur a Same Day Entry Fee
Automated Enrollment Entries (ENRs) will not be processed as same-day entries. ENRs do not use Effective Entry Dates, so there is no way to designate an ENR as a same-day transactions.
The receipt of an IAT triggers the burden of the OFAC screening requirements. Receiving IAT items late in the day could impose a significant burden on many financial institutions to complete the OFAC screening in a timely manner.
Same Day ACH treats TRC and TRX the same as all other eligible SEC codes, where settlement will be based on the Effective Entry Date.
For ACH transactions that need to be returned, faster processing of the return is typically a “win-win” for all parties. ODFIs and Originators will learn about problems sooner and RDFIs will have exceptions processed and settled faster.
Same Day ACH will allow for the same-day processing of returns, regardless of whether the forward transaction is a same-day transaction or not. All returns are eligible to be sent and processed using the same-day processing schedules. Returns that are settled on a same-day basis are not subject to the Same Day Entry Fee and are not subject to the eligibility limit on forward Same Day transactions (i.e., $25,000 per transaction; IAT).
An RDFI is not required to process returns on the same day an Entry is received, regardless of whether the Entry is a Same Day Entry.
A forward Same Day ACH entry that is returned by the ACH Operator (and does not reach the RDFI) will not be charged a Same Day Entry fee.
Reversals are eligible for same-day processing using the same eligibility criteria as other forward transactions. A same-day reversal is limited to $25,000 per transaction, so any reversal to correct a forward entry over $25,000 (for example, to reverse an erroneous next-day credit of $100,000) would not be eligible to be sent as a Same Day ACH entry. Any reversal that is processed and settled same-day will be assessed the Same Day Entry Fee.
ODFIs/Originators must ensure that the Effective Entry Date of a reversing debit to correct an erroneous Credit Entry or a reversing file to correct an erroneous credit file is not earlier than the Effective Entry Date of the related credit(s). Since Phase 1 permits only same-day credits, a debit that reverses a credit Entry will not be eligible for same-day processing during Phase 1. Same-day debits become eligible in Phase 2, so at that time the debit to reverse a credit could be sent and settled the same-day.
CCD and CTX entries, as well as other entries that carry remittance, may be eligible to be sent as Same Day ACH. Requirements related to provision of remittance to Receivers will not change.
Same Day ACH and real-time payments will offer complementary options for users, as they will have distinct functionality and thereby meet distinct needs of various use cases. Today’s ACH Network supports traditional ACH debit payments –bill payments, for example – as well as traditional credit payments like payroll. Approximately 60% of ACH transactions are debit payments. A real-time system would likely provide credit payments only; however, there is benefit to moving both credits and debits faster.
For additional FAQs please see the Federal Reserve’s Same Day ACH Resource Center: