The Federal Reserve Board on Wednesday, Sept. 23, approved enhancements to the Federal Reserve Banks’ same-day automated clearing house (ACH) service, despite opposition from the National Association of Convenience Stores (NACS) and other stakeholders.
The enhancements are intended to align the Reserve Banks’ same-day ACH service with recent amendments to NACHA (The Electronic Payments Association)’s ACH operating rules and will facilitate the use of the ACH network for certain time-critical payments, accelerate final settlement and improve funds availability to payment recipients.
The enhancements will be adopted by incorporation of NACHA’s amended operating rules into Operating Circular 4, governing the Reserve Banks’ ACH services.
“With the Federal Reserve’s support of the NACHA rule, the industry’s commitment to modernizing the payments system and enabling a ubiquitous faster payment option can be fully realized,” said Janet Estep, president and CEO of NACHA. “Same Day ACH is a game changer as it will enable new options for consumers, businesses and government entities that want to move money faster, and will serve as a building block for enabling payments innovation in the development of new products and services.”
On May 27, 2015, the Board requested comment on proposed enhancements to the Reserve Banks’ FedACH SameDay Service. The proposed enhancements were intended to align the existing FedACH SameDay Service with amendments to NACHA’s Operating Rules and Guidelines that were approved by NACHA membership on May 19, 2015.
NACS reported earlier this year that on July 2, it commented that the mandatory faster settlement of ACH transactions would be beneficial to consumers and c-store retailers alike, however it criticized the Fed’s possible incorporation of NACHA’s centrally set interbank fee to fund the upgrade, which NACS pointed out looked “suspiciously similar to a swipe fee.”
The new rule builds upon existing, next-day ACH Network capabilities by establishing two new same-day settlement windows. The rule also requires that all Receiving Depository Financial Institutions (RDFIs) receive same day transactions and provide faster funds availability to customers. Additionally, the rule establishes the methodology for a Same Day Entry fee as a mechanism for RDFIs to recover some of their costs for enabling and supporting mandatory receipt of same-day ACH transactions.
The rule will be implemented in three phases. In Phase 1, ACH credit transactions will be eligible for same day processing, supporting use cases such as hourly payroll, person-to-person (P2P) payments and same-day bill pay. In Phase 2, same-day ACH debits will be added, allowing for a wide variety of consumer bill payment use cases like utility, mortgage, loan and credit card payments. Phase 3 introduces faster ACH credit funds availability requirements for RDFIs; funds from Same Day ACH credit transactions will need to be available to customers by 5 p.m. RDFI local time. Phase 1 will become effective Sept. 23, 2016.