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Will Same Day ACH affect me? Setting the record straight on Same Day ACH

By: Jen Kirk, AAP, EPCOR’s Director of Industry Relations

December 21, 2015 -- Now that NACHA’s Same Day ACH rules have passed, and the Federal Reserve has announced its support for NACHA’s Same Day ACH rules, rumors are flying about who does and doesn’t have to comply with Same Day ACH. If you’re wondering whether or not Same Day ACH will affect you, the short answer is yes. Every single financial institution must comply. Here is the low down on how Same Day ACH will be implemented and how your credit union can benefit from this industry-wide change.

Who will help you figure out the Same Day ACH transition?
The following resources are ready to assist you:

  • Corporate One has a number of AAPs on staff to assist you with training, testing and going live with Same Day ACH. Corporate One also collaborates with EPCOR to provide timely trainings to our members. For more information about how to get started, contact Member Services at 866/MyCorp1.
  • EPCOR (or your affiliated payments association) is investing endless hours to make sure our training is top-notch and helps you sort out how these rules are going to impact your financial institution.
  • Your core processor or data processor should be “in the know” about Same Day ACH. They are most likely already working on ways to help you automate processes to ensure your account holders will get their money on time with little impact to your staff. 

Reviewing the three phases of Same Day ACH

It’s important to remember that Same Day ACH will be implemented in three phases. NACHA’s phased approach is meant to allow credit unions to take small, easy steps toward the final implementation, giving you time to determine demand, and to figure out how Same Day ACH will affect your processing and back office functions.

  • Phase 1 (September 2016) is when all Receiving Depository Financial Institutions (RDFIs) must align their processes to ensure they can accept Same Day ACH entries, but it does not specify a specific time when those funds must be posted. Originating Depository Financial Institutions (ODFIs) may to transmit same-day credits.
  • Phase 2 (September 2017) allows ODFIs to transmit same-day debits. 
  • Phase 3 (March 2018) is when RDFIs are required to post same-day credits by 5:00 p.m. on the settlement date of the entry.

Of course, the volume your credit union will receive remains to be seen. Most ACH transactions will continue to settle in the traditional two-day ACH credit and one-day ACH debit models that already exist. The majority of the ACH entries you will receive work the exact same way as they do today.

Benefits of ACH to you and your members

While many of you are focusing on the logistics involved with complying with this upcoming change, I encourage you to not lose sight of the benefits Same Day ACH will bring to you and your members:

  • Keeping up with the current (and inevitable) movement toward faster payments. Mobile technology has made significant changes to our culture. The ability to access information immediately, anywhere and at any time, has changed people’s expectations and habits. Your members want access to their financial information in ways they never have before, and they are wanting their money to move faster too. Member service organizations must keep up with the faster-payments trend to stay relevant in the industry, to ensure the retention of current members, and to increase the growth of new ones. Implementing Same Day ACH is a step in the faster payment direction, providing your members (especially your millennials) what they are looking for.
  • Additional member service solution. Wouldn’t it be great to have an effective and efficient solution for your member when they miss their traditional payroll or billing deadlines? With Same Day ACH, your credit union will have another solution to serve your members better—because missed deadlines are a fact of life. One of the largest use cases for same-day credits is the contingency for a missing a traditional two-day ACH deadline when originating a payroll file or paying bills.
    • For example, if an Originator misses a traditional payroll deadline today, they struggle to get their employees paid on time. Same Day ACH will assist employees getting paid on the correct date when their employer inadvertently misses a payroll deadline.
    • In addition, if the member misses a bill due date, it is a benefit to the member to avoid late charges and possible interest charges by using Same Day ACH. Plus, through Same Day ACH, an inter-bank fee will be paid by the ODFI to the RDFI.
  • ACH is everywhere. One of the greatest benefits of the ACH Network is that it is ubiquitous, meaning that it touches every single financial institution (bank and credit union) in the country. If you have a routing number, you must accept ACH transactions, and by accepting those ACH transactions (both credits and debits), you are required to follow the ACH Rules. If the individual participants within the ACH Network had the opportunity to opt-in and opt-out as each financial institution felt necessary, the ACH Network would not work.
    • For example, imagine a payments network where employees gave banking information to receive direct deposit via ACH, but it was up to the employer’s financial institution to determine whether the routing number accepted ACH. This would severely decrease the number of employers willing to participate in direct deposit. 

Looking ahead to Phase 2

Just a quick note about Phase 2 to clarify the debiting process for those who may have questions. In Phase 2 (September 2017), we will begin to see some Same Day ACH debits transmitted through the ACH Network. The most important thing to remember with these debits is that Originators have still warranted they are NOT debiting a consumer’s account until an agreed-upon date.

  • For example, if the insurance company doesn’t have permission to debit a consumer’s account until the 15th of the month, the insurance company will still not be able to debit the consumer’s account until the 15th of the month. And, if they try to debit it on the 14th of the month, the consumer has the right to return the item as unauthorized. 
  • However, Same Day ACH may help those members who forget to pay a bill until the due date. With same-day debits, if the Originator allows, consumers may be able to avoid a late fee or interest charge by using a Same Day ACH option to pay a biller that debits his/her account on the same day.

Corporate One will be offering more learning opportunities for you on Same Day ACH in early 2016. Keep your eyes peeled, and take advantage of the expertise of their on-staff Accredited ACH Professionals (AAPs). Also, don’t forget your payments association affiliation, like EPCOR.