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The article below has been republished , written by Holly Merrill, co-author of two books LexisNexis Sheshunoff: Automated Clearing House Transactions: Operations,Compliance, and Audit and the ACH Training Manual.
There are a number of important implications to the new Same Day ACH rule that banking executives and their legal counsel need to contemplate.
Financial institutions sending Same Day transactions will be charged a premium fee to cover some of the costs to expedite payments with Same Day ACH. These fees will be collected by the two ACH Operators with the understanding that a portion of those fees will be credited back to the receiving financial institution to help offset the costs they are incurring to create the necessary infrastructure for compliance with the new rule.
NACHA and the Federal Reserve have mandated that all banks and Credit Unions currently using the ACH Network must be able to receive and settle Same Day ACH according to the new rules. It will no longer be optional to receive Same Day ACH. It will be optional for sending Banks to offer this service to expedite outgoing ACH transactions. Companies that would benefit from this new service should contact their bank or ACH service provider.
Since Same Day ACH will revolutionize the ACH Network, all financial institutions will be impacted. NACHA and the Federal Reserve encourage all financial institutions to begin looking at the internal impacts to operations, processing schedules, agreements, return processing, settlement, risk management, etc. If a Third Party Service Provider is used, begin discussions to ensure they will be prepared for each of the phases.
The Federal Reserve has also laid out a plan to work with banks and merchants to research and identify potential approaches for facilitating faster payments throughout the financial system. They have indicated they will present some of their proposals by the end of 2016 and are likely to be focused specifically on payments between business and individuals. Banking executives and their legal counsel need to stay tuned to these changes from the Fed and assess how they fit with the NACHA rules.
When the U.K. moved to faster payments in 2008, British banks saw a big increase in fraud as criminals took advantage of the collapsed window of time for banks to review risky transactions. U.S. banks would be well-served to review their risk and fraud policies in addition to their staffing resources to meet the challenge of faster processing.
Download the full PDF, “Same Day ACH Allows Payments to Move Faster,” for deeper insights into the new laws’ implications.
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About the Author:
Photo Credit: GIACT
Holly Merrill, AAP, is the Chief Compliance Officer for GIACT Systems, a national provider of Account and Identity Verification Services. Holly has more than 37 years of experience in payments, including serving as CEO of PaymentsPLUS, CEO of Payments Resource One (PRO) one of the Regional Payments Associations that was also one of the private sector ACH operators. She is also a past member of the NACHA Board of Directors, the National Organization of Check Clearing Houses Board of Directors.
Holly is co-author of two books from LexisNexis Sheshunoff: Automated Clearing House Transactions: Operations, Compliance, and Audit and the ACH Training Manual. She is also a frequent speaker and conducts Sheshunoff's ACH certification training webinars.
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