Same-Day ACH A New Rule; A New World

18 Pages·2015·0.69 MB·English

by  Mark Brown

Same-Day ACH
A New Rule; A New World
August 21, 2015
Puerto Rico Same Day ACH
Symposium
DISCLAIMER
The information contained herein has been prepared for general informational
purposes only and is not offered as and does not constitute legal advice or legal
opinions. You should not act or rely on any information contained herein without first
seeking the advice of your legal counsel.
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Improving Network Speed
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NACHA’s Same Day ACH Initiative
• The industry has been interested in improving the way ACH processes and settles for a number
of years

– Batch Processing
– Next Day Settlement
– Not on pace with other payment innovations/treasury practices

• NACHA proposed a model for speeding up ACH in 2012

– Expedited Processing and Settlement (EPS)
– Did not guarantee funds expedited availability
– Was not supported by a sufficient business case

• NACHA engaged with industry over the next 3 years and developed a revised proposal to the
industry

– Surveyed ODFIs and RDFIs to identify cost factors
– Interviewed stakeholders to better understand “pain points”
– Request for Comment published 12/14
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The Rationale
• Same Day ACH meets the needs of end-users for use cases such as payroll, bill payment,
business-to-business payments, and account-to-account transfers

• A “Same Day” fee paid from the ODFI to the RDFI would provide, on average, recovery of
implementation and operating costs, plus a reasonable rate of return, for RDFIs to enable
Same Day ACH

• Same Day ACH would be implemented in three phases, beginning with Same Day ACH credits
in September 2016; Same Day ACH debits in September 2017; and faster funds availability in
March 2018

– These effective dates are contingent upon receiving a timely commitment from the Federal
Reserve to support the rule

• Same Day ACH is an immediate action that financial institutions can take to modernize the
payment system, with functionality that can be leveraged in the future for real-time payments
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Supporting New Use Cases
• Same Day ACH addresses needs of end-users:

– Payroll products to better support hourly workers and other payroll needs
– Bill payments and invoices due on that day
– Billers and banks looking to better manage credit risk and returns
– Moving payment-related remittance information on the same day

• Same Day ACH settlement reduces credit risk between organizations by lessening the
exposure among counter-parties at any given time

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Supporting New Use Cases
• Same Day ACH is an immediate action that can be taken to modernize the payment system,
while utilizing a balanced approach among originating and receiving financial institutions

– Creates a foundation on which financial institutions can build other services

– Demonstrates that financial institutions can move forward to advance the payment system

• Implementation of Same Day ACH would lead to changes within financial institutions that
could also be utilized for real-time payments in the future:

– Intra-day posting and funds availability of credits to DDA systems

– Improved risk management before credits are sent
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What is the Rule?
• The ACH Operators will offer two new same-day processing windows

– A morning window with a submission deadline of 10:30 AM ET, with settlement occurring at
1:00 PM ET
– An afternoon window with a submission deadline of 2:45 PM ET, with settlement occurring
at 5:00 PM ET

• ODFIs will be able to submit files of same-day ACH payments through the two new clearing
windows that can reach all RDFIs in the ACH Network

• All RDFIs will be mandated to receive Same Day ACH payments

• RDFIs will be required to make funds available from same-day ACH credits (such as payroll
Direct Deposits) to depositors by 5:00 PM local time

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Intra-Day Settlement Windows
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EPN Proposed Operating Windows
Morning Service
 4:30 pm Next Day to 10:30 am ET Current Day (16:30 Next Day-10:30 am ET Current Day) –
Same-day settlement window for same-day eligible forward items and ALL eligible returns
 10:30 am to 11:00 am ET (10:30-11:00) – Exchange of all items between FRB and EPN
 11:00 am to 12:00 pm ET (11:00 – 12:00) – Output file delivery of all items during morning
window plus advices
 1 pm ET (13:00) – Settlement for morning service

Afternoon Service
 10:30 am to 2:45 pm ET(10:30 -14:45) – Same-day settlement window for same-day eligible
forward items and ALL eligible returns
 2:45 pm to 3:15 pm ET (14:45-15:15) – Exchange of all items between FRB and EPN
 3:15 pm to 3:45 pm ET (15:15 -15:45) – Output file delivery of all items during afternoon window

Late Afternoon Service
 2:45 pm to 4:00 pm ET (14:45-16:00) – Same-day settlement window for ALL eligible returns only
 4:00 pm to 4:30 pm ET (16:00-16:30) – Exchange of ALL items from EPN to FRB
 4:00 pm to 4:30 pm ET (16:00 – 16:30) – Output file delivery of ALL entries during late afternoon
window plus advices
 5:00 pm ET (17:00) – Settlement for afternoon and late afternoon service

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