As of September 2017, NACHA implemented Phase 2 for same day ACH payment processing so that payroll direct deposits and other forms of ACH payments (debits) can be made earlier than "next business day."
According to NACHA – the Electronic Payments Association, business-to-business same day ACH payments that include direct deposits averaged over 10,000 transactions per day during the first 11 days of same day ACH processing from September 15-30.
For just about everyone involved with ACH direct deposits, same day ACH is a welcome change. However, there are some important limitations of its use and best practice guidelines for when to use same day ACH – and when to avoid it.
Same Day ACH Limitations
- ACH payroll batches must be received much earlier in the day than standard next day ACH
- There is a $25,000 maximum limit per same day ACH transaction
- All RDFIs are required to receive same-day ACH payments but can wait until the next day to post the payments; during Phase 3, as detailed below, this limitation will go away
Same Day ACH Best Practices
While it has some payroll providers rejoicing, there are some very important guidelines to ensure the best use of same day ACH by payroll providers:
- Banks and ACH payroll processors typically have additional criteria for which payroll providers qualify for same day ACH (not everyone will qualify)
- ACH payroll processors typically require a Fedwire or direct wire transfer to reduce the risk of insufficient funds
- Same day ACH will cost you more per transaction than non-same day because of the increased processing required and risk of insufficient funds
- As a result, same day ACH should only be used on an emergency basis
After three months of offering this service, we recommend that payroll providers only use same day ACH payroll processing when you forget to approve a batch or for any other type of mistake or last-minute change. Same day ACH is too costly and risky to use on a regular basis.
WesPay to Request Same Day ACH Changes & Your Input Requested
NACHA has submitted a Request for Comment (RFC) on proposed rules to expand same day ACH.
Western Payment Alliance (WesPay), a membership-based payments association focused on regulatory compliance, risk management and operational sound practices across various payment channels, has requested the following changes to NACHA's same day ACH Phase 2 requirements based on input from their members – if you are a member, WesPay requests your comments about this through January 26, 2018:
- Adding a later window for processing same day ACH transactions
- Changing the $25,000 max to $100,000
- Providing faster funds availability to receivers of both same day and non-same day ACH credits
- Although not part of the request, WesPay has asked for input if adding ACH processing on weekends and holidays would be advantageous for its members
Same Day ACH Phase 3
As of March 16, 2018, the third phase of same day ACH will require RDFIs to accept and post same day ACH by 5pm local RDFI time. Today, RDFIs are currently required to process same day ACH up until the end of their processing day, which is often 3pm local RDFI time.
If you have questions about anything related to same day ACH direct deposits, contact us to speak with one of our experts. We're happy to help and can provide the clarity you need.