Why is ACH important? Well, if you consider receiving your paycheck every week via direct deposit important than you will see why ACH is of importance. The Automated Clearing House (ACH) is the system that allows direct deposits into your account. These deposits are called ACH transactions and starting in March of 2018 these transactions have been improved.
What is Same Day ACH?
Usually ACH takes about 2-4 business days but NACHA, who manages the ACH Network, have created a new rule called Same Day ACH. This rule allows for ACH to be processed within 1 day which means that money moves in the same way but much faster. There were 4 specific things that the rule change brought about when it was implemented in 2016:
- A new ACH entry type was provided for banks and providers in order to compile batches of same day payments.
- A faster process was created by opening two additional “windows” to process ACH files. The processes were made faster in 2018 when a third “window” was opened.
- All financial institutions were required to receive same day credits in 2016 and Same Day debits in 2017.
- All financial institutions were required to make available same day funds available to the payee by the end of the business day (on the same day).
The Newest Changes to Same Day ACH
On March 16, 2018 Same Day ACH’s were improved. Phase 3 of moving payments faster was implemented which mandated RDFIs to make sure that same day ACH funds will be available to their depositors by 5:00 PM at the RDFI’s local time. Two additional clearing windows were added that include:
- 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.
Both debits and credits are available for same day transactions. The only type of payments that are not eligible for same day are international transactions and high value transactions above $25,000. Approximately 99 percent of current ACH Network volume are eligible for same day. Don’t worry about your RDFI not being able to handle Same Day ACHs because all RDFIs are required to receive same day payments. The reason for changing this process in phases is to make sure financial institutions and businesses are able to adjust with ease. The implementation goes smoother because there are no drastic changes all at once. To learn more go here to NACHA’s Same Day ACH Resource Center.
Frequent Questions About the Changes
- Will the receipt of same day credits impact corporate receivers?
- It is required for the Corporate Receivers of same day ACH credits to credit a customer’s account for a same day payment. Of course, there will be a reasonable time allotted for the credit to appear in the customer’s account.
- Why are large dollar transactions (above $25,000) ineligible?
- The velocity of payments is important in order to handle risks and the velocity will be faster if there are smaller dollar amounts. This won’t be much of a problem considering that 99% of ACH transactions are below $25,000.
- Will Same Day ACH be available for all account types?
- As long as your account is able to receive ACH transactions it will be able to receive Same Day ACH transactions.
- What is the Same Day Entry Fee?
- The entry fee is 5.2 cents and it will be collected by the ACH Operators through monthly billing. The fee will be paid from the ODFI to the RDFI for each Same Day ACH transaction.
In order to find out more and view other frequently asked questions go here to the Same Day ACH’s information page.