Faster payments were boosted on Friday as Nacha, the governing body of the country’s automated clearinghouse network, raised the limit on same-day payments from $25,000 to $100,000. The move follows similar action earlier this year by The Clearing House Payments Co. for real-time transactions and should be particularly attractive for business-to-business payments, where the lower cap was widely seen as crimping use.
Nacha says it is responding to industry demand by quadrupling the dollar cap. “This is one of the most requested changes nacha has been requested since the launch of the ACH the same day,” Nacha President and CEO Jane Larimer said in a statement. “With the new $100,000 limit, we expect same-day ACH to be even more useful to businesses and consumers alike.” The ACH network, which connects virtually every financial institution in the country, launched same-day credit processing in 2016 and tracked debits a year later.
Friday’s move should help boost volume on the day as companies in particular react to the upper bound. ACH experts say health insurance payments to hospitals and doctors are likely to be particularly sensitive to the new cap. “One thing I’m aware of is health care payments. It was heavily check-oriented,” says David Fortney, executive vice president of New York-based TCH, who spoke with Digital transactions for an upcoming article on the ACH. Now, with a broader dollar range, this segment should have “great growth potential,” he says.
Nacha estimates that the higher limit will increase the overall share of B2B payments eligible for same-day processing to 97% from 91%.
TCH, moved its dollar limit on real-time clearing to $100,000 effective Feb. 1, also in response to industry demand. Unlike real-time processing, which typically moves money within minutes, same-day ACH is settled at the end of the processing day, whereas regular ACH transactions typically settle the next day.
Nacha officials say the same-day option has been well received, even before the effective date of the upper dollar limit. “We’ve been pleasantly surprised ‘by the adoption so far,'” says Michael Herd, senior vice president at Nacha, who also spoke to DT for his next article, which will appear in the April issue.
According to Nacha statistics, the network completed 250.4 million same-day transactions last year, up 41% from 2018. Dollar volume was $247 billion, an increase of 55 %.
Another change that should give a further boost to same-day processing will arrive in March next year, when the ACH adds a third window and later for entering daily transactions. Under this rule change, the Federal Reserve will keep its National Settlement Service open until 6:30 p.m. Eastern Time, one hour later than its current closing time. The Fedwire Funds service will remain open for an additional half hour until 7 p.m. As a result, the last daily deadline for same-day ACH will be at 4:45 p.m. EST, two hours later than the current cut-off time.
This should allow more same-day volume to enter the system from parts of the country in time zones that make it difficult to meet an early deadline. “It really gets things done for West Coast entities. It will make a difference,” says Fortney.