Putting Faster Payments To Work

Not only are Same Day ACH payments on the way, but they are expected to have huge impacts on the way payments are made throughout the payments landscape.

And we’re not just talking about speeding them up.

As we learned in last week’s installment of the Countdown to Same Day ACH podcast series, the first phase of the Same Day ACH initiative launches on Sept. 23, ushering in three daily settlement windows, five days per week, to support access to more efficient transactions.

NACHA President and CEO Jan Estep made it clear that the industry is more than ready for the change, and this week, she provided us with a look at several use cases and applications that Same Day ACH payments are sure to deliver on.

The Importance Of Certainty

The Same Day ACH capability is designed to move payments and payment-related information faster — ensuring that any ACH payment can reach absolutely anyone else in the country on the same day, regardless of which bank or credit union is used.

The initiative is centered around ubiquity, something that’s hard to achieve but what Estep said is necessary to provide tremendous value.

“Same Day ACH really serves as an immediate solution to support the demands of consumers and businesses that simply want to move money faster,” she explained.

The goal is that both consumers and businesses will be able to use the new capability in a variety of new ways.

The ACH Network today supports many types of payments and environments in which those payments can be made. So, by adding options for speed, Same Day ACH will be able to provide benefits across all ACH Network users.

The New Face Of Faster Payments

According to research commissioned by NACHA related to the needs of payment users in the U.S., there are a total of 63 potential use cases for faster payments in the market today. Of those 63, NACHA has identified 10 primary use cases that, in the end, are projected to generate nearly 1.4 billion Same Day ACH transactions, Estep confirmed.

Many of those use cases actually align with some of the traditional uses of ACH, such as payroll for businesses and bill payment for consumers and businesses.

For payroll and direct deposit payments, which make up a third of the ACH Network today, Same Day ACH can provide good backup for anyone that wants to move payroll faster or not worry about the impacts from potentially missing a file delivery date.

Most payroll is executed by businesses on a Friday, meaning that, if a Thursday deadline is missed, it can result in a major pain point for both those employers and employees.

Estep explained that Same Day ACH can enable a payroll file to be submitted on Friday morning and ensure that funds from those direct deposits are available to employees that same day, providing the funds to cover any debits coming out of their account later that day.

Faster payments will also help businesses to pay hourly employees in a timelier manner, she added, giving employers flexibility and the opportunity to avoid the lag time that usually takes place between final hours being reported and when payroll can be processed.

In the same way, Same Day ACH can help businesses or consumers with cash flow. They will be able to initiate a Same Day ACH credit on the last day an invoice or a tax return is due, thereby conserving cash and still meeting the due date.

This will also be the case when it comes to urgent needs for P2P or other account-to-account payments, Estep noted.

“As we look to the second or third phases of our implementation of Same Day ACH when debits will be supported, things like getting faster returns on debits will also help our payments ecosystem,” she said.

Building In Innovation

The use cases for faster payments are broad.

Innovation can even be found in what may seem like very basic or straightforward applications.

“Bill pay — which you view as just a general application — is one that becomes innovative if it’s highlighted to consumers and gives them an option where they can eliminate something like a disruption or a cancellation of service or avoiding a late fee,” Estep stated.

The importance is shedding light on the value-add of the experience once faster payments are involved.

“The key is not just being able to move the funds that rapidly, but it is innovation that’s infused in terms of the service layer,” she continued.

This is the point at which unique payment applications are developed.

Estep emphasized that it’s not just the movement of the money but how you make it easy to pay.

“The innovation on top of the ACH Network is really the way for that to happen,” she said.

“When you think about innovation in this environment, it’s looking at the benefit of cost savings, efficiencies and good customer service for businesses and for consumers alike.”