You may have read in the news about progress being made in speeding up payments and debits which run through the Automated Clearing House, or Same Day ACH. Ordinary ACH payments settle overnight; this new system batch processes transactions twice per business day. Transactions created before 10:30 AM ET will settle at 1 PM, and transactions created before 2:45 PM will settle at 5 PM.
Same Day ACH rolled out in three phases. In September 2016 the option was enabled for credit payments (sending out money). In September 2017 it was enabled for debit transaction (pulling money in). Phase 3 will take effect on March 16, 2018 when all banks will be required to actualize Same Day ACH payments by making the funds available by 5 PM. All domestic transactions under $25,000 are eligible for Same Day ACH.
If you’re expecting to see your payments show up within hours, think again. Same Day ACH is mostly theoretical. It allows banks the option to send same day ACH, but banks will usually charge fees for that service (presumably because it costs them more). For now, it’ll likely remain the exception, not the norm, though I’d expect that to change in the coming years.
I have noticed some ACH payments go faster than they used to, like when doing Paypal withdrawals they usually show up the next day. This is probably to keep up with customer demands, but it largely does not seem to be using the new, faster ACH option.
So how does Same Day ACH affect us right now? Or, does it affect us currently?
- Whenever you accept an ACH-debit on your account, e.g. when you pay your credit card bill or electric bill, or even if write a check, be sure all required funds are already in the account. Don’t rely on funds clearing later in the day or overnight since there’s always a chance it’ll be pulled out of your account within hours.
- If you use any sort of payment system in your bank’s login (these are becoming increasingly irrelevant in today’s age of sending money via Paypal, Venmo, Facebook, Square, Zelle, etc.), you might notice an option to send a Same Day payment for a fee. This may be useful occasionally.
- A friend of mine received money via ApplePay and noticed the funds in her bank within hours. It might be that ApplePay is using same day ACH. So while not the norm currently, there might be some payment processors using it.
- Businesses are the ones most likely to be affected by the faster system. If you run any sort of retail business, cash flow is probably an issue. Utilizing the same day option might be worth it, even for a fee.
- Maybe some people are getting their paychecks direct deposited faster using the same day system (??).
It’s worth noting here two other systems in place to get payments within hours, or even instantly: Zelle is a P2P payment system which works instantly for participating banks. That’s similar to what most banks offer instant send-money transactions to friends who also use the same bank. Another initiative is the option to get money instantly via debit card instead of bank account info. Businesses like Paypal and Venmo offer you instant cash for a small $.25 fee, and Square Cash has always used this instant method. ACH is a different platform, much more widely used, which does not offer any instant transaction option, but now has introduced a same-day option.
Let us know where you’ve seen same day ACH payments in action.
