ACH network unveils same-day bill pay
Payment network change also speeds up direct deposit of paychecks
By Brady Porche | Published: September 27, 2016
Credit card users running late on a bill now have a new option: same-day payment.
The trustee of the electronic banking network Automated Clearing House (ACH) announced Sept. 23 the first phase of Same Day ACH, which enables consumers and businesses to send and receive payments on the same day. Prior to Same Day ACH, banks and credit unions would batch all payments received in one day and process them the next. Now, the cycle of processing payments will occur three times each day.
Jane Larimer, executive vice president of the ACH Network Administration, said the two additional payment windows enable credit card users to make same-day bill payments to issuers through their online banking systems, if their banks support expedited bill pay.
“They could send out a payment after lunch and have it clear through the afternoon window,” Larimer said. “It could be applied to their account with the credit card issuer by the end of the business day.” Payments made after 5 p.m., however, are still placed into the overnight processing window — which existed prior to Same Day ACH — and are settled first thing in the morning.
Larimer said Same Day ACH can also expedite urgent transactions such as emergency service and insurance claim payments and help employers pay hourly and contract employees more quickly.
“Because of the overnight cycle, it’s not fast enough to help move those kind of employees onto direct deposit,” Larimer said. “Same Day ACH makes it much more likely that an hourly worker or a contract worker could be supported using direct deposit.”
All financial institutions are required to receive Same Day ACH payments as of Sept. 23, but they are not all required to send them. Larimer said that all banks in its network (Originating Depository Financial Institutions, or ODFI) had either fully adopted Same Day ACH by the roll-out date or would be ramping up by the end of the year. Smaller entities that have not yet adopted expedited bill pay may enable Same Day ACH in late 2016 or early 2017, she said.
“We’ve done some outreach, and what we understand is that of the top ODFIs, 95 percent of them are going to be up this year,” Larimer said. “Most of them were up on day one and things went very smoothly.”
A second phase of Same Day ACH set to roll out Sept. 15, 2017, will allow faster processing and settlement of debit transactions and will support credit card, utility, mortgage and loan payments. In Phase 2, credit card issuers and other bill payees will be able to pull payments from users’ bank accounts when authorized, giving customers another option to make last-minute payments without incurring late fees and other charges.
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