Nacha recently announced a rule change allowing for same day ACH payments. This decision was a heavily debated throughout the industry for several years.
The association is to be congratulated for taking this step; by implementing this rule, they are helping the United States start to catch up with the rest of the world.
Many believe this move by Nacha is just the first in a series that it will take toward building a real-time payments network.
Wherever Nacha goes in the future, same-day ACH payments will have a significant and immediate impact on the industry. Consumers and businesses will see benefits related to their access to cash and ability to address commitments to third parties in a timely manner. Because the cost structure of the ACH rail is significantly less expensive than other payment rails, the organizations that use these rails, and their customers, will benefit from this inherent cost efficiency. Even with the $.052 cost associated with a same day ACH, the overall cost of using the ACH rail is very compelling.
Though the deployment of same day ACH processing does represent another regulatory change that creates costs for financial institutions, savvy banks and credit unions will take advantage of the service advantages, reduced operational costs and the potential to drive incremental revenue. With same-day ACH, the ability to move money to other accounts, merchants, bill pay recipients, and other people is much improved. Consumers and businesses do not need to understand how their money is moved. They can focus on what matters to them how much, to whom and by when.
The low cost of ACH transactions also allows financial institutions to significantly reduce their costs for using money multiple movement services, such as bill payment, A2A and P2P. If money can be moved over ACH the same day at a fraction of the cost compared to these other services, then financial institutions can reduce the amount of money they pay to provide the basic services their customers want.
Additionally, the expedited nature of same-day ACH payments provides an opportunity for banks and credit unions to offer expedited payments for users. Today, expedited payments usually involve charging a fee to overnight a paper check. With same-day processing, a bank or credit union could charge an amount for a same day payment that still represents a savings over the current model for consumers meaning everybody wins.
To take full advantage of this new Nacha rule, financial institutions need to rethink the model they use to provide money movement services to their digital customers. Most use discreet, siloed money movement services from a variety of vendors. Instead, they need to take a more holistic view of the services that control user experience, decisions about routing the payment and the data associated with the users' activities. Not only will this allow financial institutions to benefit from same day ACH, but it will also position them to take advantage of the continued innovations that will be coming as the industry moves towards real-time payment services.
Mark Vipond is CEO of D3 Banking, a provider of data driven digital banking. He can be reached at Mvipond@D3banking.com.