Responding to a high demand from corporate end-users, NACHA is increasing the limit for Same Day ACH.

NACHA APPROVES NEW RULES

NACHA announced this week that its voting members have approved three rules to expand the capabilities of Same Day ACH to banks and their customers. The changes will likely bode well for corporate treasury professionals who are interested in using Same Day ACH.

Perhaps most importantly for treasury professionals will be the increase in the Same Day ACH per-transaction dollar limit. Currently capped at $25,000, the threshold will be raised to $100,000.

NACHA will also allow Same Day ACH transactions to be submitted to the ACH network for an additional two hours every business day. To accomplish this, a new processing window will be created.

The speed of funds availability for certain Same Day and next-day ACH credits will also be increased. Funds from Same Day ACH credits processed in the existing first window will be made available by 1:30 p.m. local time, while funds from certain other ACH credits will be available by 9 a.m. local time.

“Since the initial adoption of Same Day ACH, business users of ACH have been asking for enhancements,” said Jane Larimer, chief operating officer of NACHA. “NACHA and its members are now delivering those enhancements.”

The new rules will go into effect at different times. The faster funds availability rule is first, becoming effective on Sept. 20, 2019. Next up is the increase in the per-transaction limit on March 20, 2020. Lastly, the new Same Day ACH processing window goes into effect on Sept. 18, 2020.

Treasury perspective

A common issue that treasury professionals have had with NACHA’s Same Day ACH service has been the $25,000 limit on transactions. Treasury departments often make high-value payments, and so a same-day service that only allows for such a low amount doesn’t hold much interest for many practitioners.

“NACHA is addressing one of the main pain points of Same-Day ACH—the low dollar value,” said Magnus Carlsson, AFP’s manager of treasury and payments. “Increasing the limit will facilitate a wider range of use cases.”

Treasury professionals have frequently voiced their concerns about the limit to NACHA since Same Day ACH has gone into effect. During a panel session at Payments 2017, Julie Walker, senior treasury analyst and card and payments specialist for REI, said that her company would be very interested in using Same Day ACH to pay federal taxes. Should REI make an error, the company either needs need to quickly make a payment to correct it or face significant penalties. “The $25,000 threshold would preclude us from doing that,” she said.   

Likewise, Stephanie Uhl, CTP, assistant treasurer of Forest City Realty Trust and a member of AFP's Board of Directors, explained in an interview at Payments 2018 that the $25,000 limit is far too low for the transactions her organization typically makes via ACH. “We don’t use ACH payments primarily for small dollar payments. We use them for mortgages; we use them for over $1 million payments. We use them as our primary payment method,” she said. “Something under $25,000 just doesn't seem to be valuable to us.”

However, in Uhl’s case, upping the threshold still might not be enough for her organization to adopt the service. “It would be difficult to reconcile, from a treasury perspective, which of our payments are going same-day, and which are going in two days,” she explained. “That’s just not something that we really want to figure out.”

Thus while these changes are an improvement, NACHA may find that it may need to loosen the rules up even further if it wants to achieve mass corporate adoption of Same Day ACH. “Even though $100,000 is a great increase, there is definitely room for expanding the limit further in order to make Same-Day ACH attractive for corporate end-users,” Carlsson added.

AFP 2018 has multiple sessions on faster payments and Same Day ACH in the Payments track. Learn more here.