ABA Banking Journal - January/February 2016 - (Page 44)

>>> PAYMENTS Realizing the Value of Same-Day ACH When same-day ACH credit capability becomes available this fall, it will provide a wide variety of opportunities to add value for business and retail customers alike. BY JANET O. ESTEP E ach year the ACH Network- the payment network that universally connects all 12,000 financial institutions in the U.S.-transmits billions of transactions, mostly overnight from one financial institution to another to support direct deposit and direct payment via ACH. Yet in today's environment, everyone wants everything faster-and that includes payments. This is why NACHA, the electronic payments association, together with the industry, is moving payments faster with same-day ACH. This initiative serves as an immediate action that the industry has taken to modernize the payments system and create a building block for a variety of products and services. It also provides an opportunity for every bank to review the services they offer to their customers. As of Sept. 23, 2016, Phase 1 of same-day ACH implementation will expand the traditional functionality of the network by supporting ACH credits moving more rapidly with three official settlement windows every 24 hours. It will provide an option for businesses, consumers and government entities that want to move money directly from their bank account more quickly and efficiently, supporting uses such as 44 ABA BANKING JOURNAL | JANUARY/FEBRUARY 2016 same-day bill or invoice payments; payroll products to better support hourly workers and other payroll needs; and B2B payments with potentially extensive remittance information. Two other mandatory phases of same-day ACH are also approved and scheduled. In Phase 2, which becomes effective Sept. 15, 2017, both credit and debit transactions will be supported. In Phase 3, by March 16, 2018, all receiving banks will be required to make available funds from same-day ACH credits no later than 5:00 p.m. local time. In a 24/7, Internetbased environment, customers demand faster payments, and financial institutions are looking for INNOVATIVE WAYS to meet those expectations. The ubiquitous nature of same-day ACH mandates that every receiving bank and credit union in the country support receipt of the three ACH settlement cycles. And that creates one of the values of same-day ACH for any consumer or business that wants to send its money the same day to someone else: There is no special enrollment nor squandered time figuring out if the other party participates. In September, they will be able to send an ACH credit to anyone in the country and have the surety of knowing that it will be received that same day. As such, same-day ACH opens the door for new business opportunities and customer solutions for financial institutions. In a 24/7, Internet-based environment, customers demand faster payments, and financial institutions are looking for innovative ways to meet those expectations. For originating banks, now is the time to decide which same-day ACH service will meet the needs of your various customers. Become familiar with the multitude of use cases. Sameday ACH is an option not only for your customers; you also have flexibility to determine which Standard Entry Class codes you may want to support.

Table of Contents for the Digital Edition of ABA Banking Journal - January/February 2016

President's View
Picture This
Economic Outlook
Community Engagement
Cover Story: Train To Your Advantage
Filling The Trust Gap
Banking In The Sweet Spot
Safe Banking, Savvy Seniors
Human Resources
Agricultural Banking
Board Matters
ABA Compliance Center Inbox
Legal Briefs
From The States
Corporate Social Responsibility
Index of Advertisers

ABA Banking Journal - January/February 2016