ACH Payroll Processing & Fedwire Blog

ACH Payroll Processing & Fedwire Blog

The future of same-day ACH

Friday, January 15, 2016
The future of same-day ACH

ACH direct deposit payroll processing payments have been a mainstay for banks and businesses for many years. The method allows these institutions to make electronic transfers of finances, making receiving money more efficient and less expensive – especially when compared to paper checks.

While initially used for transmission between two or more banks, many companies implemented the system for payroll, enabling disbursement to other organizations or individuals, including their own employees. From ACH, direct deposit was essentially born, and human resources teams discovered an easier way to distribute their workers’ earnings.

Reduced costs for businesses
Many enterprises that have decided to implement ACH into their payroll strategies made their decision based on the decreased expenses this payment method offers. As of right now, many banks will process these transactions for free. Those institutions that don’t offer complimentary conversion only charge a modest fee – less than a dollar for a smaller transfer or a couple of dollars for a larger exchange.

However, as consumers continue to urge quicker transfers and same-day ACH is implemented nationwide, banks must deal with the increased fraud risks that accompany the change. The added liability of same-day transactions and the improved, but necessary strategies for mitigating counterfeit transfers is causing institutions to move away from ACH or eliminate it from their practices completely, according to Banking Exchange

“NACHA is turning businesses’ requests for same-day ACH into a reality.”

A push for faster transactions
Although ACH offers organizations reduced costs and faster processing, the average transfer can still take two to five days to make it to the receiving party. While debit payments can take a shorter amount of time to exchange, depending on the day and time the request was sent – usually the end of the day or on the weekend – these transactions, along with credit card funds, often result in longer delays.

Retailers are calling for faster processing times for their ACH payments. Many are requesting the procedure be completed the same day as the initial request. This change would benefit expedited bill payments, payroll applications and many ad-hoc business payments as well as many other corporate and consumer needs, according to American Banker.

NACHA is taking the lead
The National Automated Clearing House Association (NACHA), the administrator of the ACH network, has heard these requests and is taking action into their own hands. The organization saw the need for faster payments six years ago during the implementation of its Secure Value Payments technology. The method leverages the ACH network for faster payments, but many institutions failed to introduce it.

Now, NACHA is working on a three-phase approach for making same-day ACH the norm. Beginning in September 2016, the organization will begin rolling out the steps necessary for both originating and receiving financial institutions to start accepting these transfers. By the end of the implementation, companies will be able to send same-day transfers for virtually any transaction with a small fee. According to NACHA’s rule, the additional cost is a way for receiving financial institutions to recover their costs for enabling and supporting the change.

The alteration from next-day to same-day payments via ACH will improve the efficiency of many businesses’ payroll processing and last-day tax and bill payments. While the transition will take some time to go into full effect, organizations will start to witness changes beginning in September.

QuantumACH™ is a new, patent-pending ACH solution from Cachet Financial Services. Offering discounted processing fees, automatic account reconciliation and no NSF reserve requirement, this software is where payroll, ACH and banking meet! This system will help businesses and their payroll teams prepare for same-day ACH payments on the horizon.

Contact us to learn more about our ACH payroll processing and wire transfer services


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