Nacha gives ACH more capacity as faster-payments expectations rise

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In addressing growing demands for faster payments, Nacha plans to increase the maximum single transaction limit to $100,000 in March and add a third settlement window in 2021.

While Same Day ACH is not a real-time transaction such as The Clearing House’s (TCH’s) RTP network, which has increased its single-transaction limit to $100,000 as well, it is much faster than standard ACH.

Nacha first introduced Same Day ACH payments starting in September 2016 with credit payments, then followed with debits in September 2017 as a way to continue to drive the adoption of digital payments in lieu of paper checks. There are currently two funds settlement windows for Same Day ACH: 1 p.m. and 5 p.m. Eastern.

Nacha is readying its network to meet with the demands of its financial institution members to increase the maximum transaction size of single Same Day ACH payments from the current $25,000 level.

“We started Same Day ACH with a per transaction limit of $25,000 for the primary reason to have the industry become accustomed to transacting at this amount. The idea was to start with a more limited amount to see if the industry was having any problems," said Michael Herd, senior vice president of ACH network administration at Nacha. "It turns out the experience was the same as regular ACH, just faster. Now we have parties that want to transact at higher levels, so this change is to meet the greater demand."

The change, announced Tuesday, will be effective March 20, 2020, and will apply to both credit and debit Same Day ACH payments. Additionally, Nacha reported that in an effort to better meet the needs of West Coast financial institutions, it will host a third funds settlement window, closing at 6:30 p.m. Eastern starting next year on March 20, 2021.

Additionally, Nacha is exploring whether to go beyond supporting payments only during the Monday-through-Friday workweek.

“The ACH industry is very interested in adding a Saturday," Herd said. "One of the ideas is to have Fedwire and National settlement service open 24/7/365. If that came to pass, we would be very interested in expanding the service to another day.”

The main reason behind Nacha’s increase in the maximum size of transactions is the growing market demand to serve use cases such as payroll and B2B payments which can often be rather sizable.

“Now that the market is comfortable with the $25,000 limit, there is keen interest in increasing the limit,” said Erika Baumann, senior wholesale banking analyst at Aite Group.

Herd noted that Nacha had some parties that wanted to go as high as $1 million per Same Day ACH transaction, although there were others who did not want to increase the limit at all.

The ACH network and its Same Day product are experiencing heavy demand as users already have infrastructure built to effectively utilize these products. In 2019, Same Day ACH volume grew by 55%, to $247 billion, and transactions were up by 41%, to 250 million, over 2018. Despite its growth, Same Day ACH remains only a fraction of the overall ACH market, which had $55.8 trillion in payments volume in 2019, up 8.9% from 2018.

In 2019 there were a number of areas that experienced strong increases in Same Day ACH usage, such as direct deposit, which rose 117% from 2018, with 77.6 million payments last year. Additionally, there were 51.7 million B2B Same Day ACH payments in 2019, up 47.5% from the prior year.

An increase in maximum limit could bring in new users, but it is "likely the volume uptick will come from existing users that will leverage the service more," Baumann said.

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