WASHINGTON—The Federal Reserve Board Wednesday announced its approval of enhancements to the Federal Reserve Banks' same-day automated clearing house (ACH) service.
The enhancements are intended to align the Reserve Banks' same-day ACH service with recent amendments to NACHA's ACH operating rules and will facilitate the use of the ACH network for certain time-critical payments, accelerate final settlement, and improve funds availability to payment recipients.
The enhancements become effective September 23, 2016, and require receiving depository financial institutions (RDFIs) to participate in the service and originating depository financial institutions to pay a fee to RDFIs for each same-day ACH forward transaction.
The enhancements will be adopted by incorporation of NACHA's amended operating rules into Operating Circular 4, governing the Reserve Banks' ACH services.
Following the announcement, the Federal Reserve Banks shared their support for the board’s action.
“With the board’s support of NACHA’s Same Day ACH Rule that will ensure a ubiquitous same-day capability for virtually any ACH transaction, the Federal Reserve’s existing FedACH SameDay Service can be enhanced accordingly,” the Federal Reserve Banks stated in a release.
“We are proud of the role that the Federal Reserve Banks have played in driving the payments industry toward an improvement of this magnitude. This rule expands upon the work we have done to effectively test the market’s readiness for same day ACH with our opt-in service,” said Marie Gooding, first vice president and retail payments product director of the Federal Reserve Bank of Atlanta. “After years of promoting the benefits of expedited processing and settlement of ACH transactions, the Federal Reserve Banks are gratified in the knowledge that all ACH Network participants will benefit from NACHA’s Same Day ACH Rule.”
The Same Day ACH Rule was approved in May 2015, and will require all RDFIs to receive same day transactions and provide faster funds availability to customers. The rule also provides for a same day entry fee as a means for RDFIs to recover costs associated with enabling and supporting mandatory receipt of same day ACH transactions. Under the Same Day ACH Rule, FedACH Services will offer two new same day settlement windows providing settlement at 1:00 p.m. ET and at 5:00 p.m. ET. Additional information surrounding deadlines and processing windows will be made available once the ACH operators have discussed such details in the coming weeks, the Federal Reserve Banks said.
As approved, the Same Day ACH Rule will be implemented in three phases with the first of these phases effective Sept. 23, 2016. Phase I will provide for same day processing of ACH credit transactions to include hourly payroll, person-to-person payments and same-day bill payments. Phase 2 will add ACH debits to same day processing and will allow for consumer bill payments to be included. Phase 3 will require RDFIs to provide faster ACH credit funds availability as funds from Same Day ACH credit transactions will need to be made available to customers by 5:00 p.m. RDFI local time.
NACHA, The Electronic Payments Association, said it “commends” the Federal Reserve on the move.
“With the Federal Reserve’s support of the NACHA rule, the industry’s commitment to modernizing the payments system and enabling a ubiquitous faster payment option can be fully realized,” said Janet O. Estep, president and CEO of NACHA. “Same Day ACH is a game changer as it will enable new options for consumers, businesses and government entities that want to move money faster, and will serve as a building block for enabling payments innovation in the development of new products and services.”
But CUNA hoped the enhancements would have been greater, particularly around costs and implementation.
“In comments to NACHA and the Federal Reserve, CUNA expressed concerns with the requirements that all receiving financial institutions have the ability to receive and post same-day ACH payments,” said chief advocacy officer Ryan Donovan. “While we support the goal of a faster payments system, we believe more could have been done to consider the implementation and other ongoing costs credit unions will face – particularly our smaller credit unions.”
NAFCU also expressed “significant concerns.”
"NAFCU and our members appreciate the Federal Reserve’s recognition of the industry-wide movement toward the adoption of faster payment technologies,” said Senior Vice President of Government Affairs and General Counsel Carrie Hunt. “While NAFCU and our members believe that ubiquitous Same Day ACH capability represents an improvement for the nation’s payment system, we continue to have significant concerns regarding the board’s inadequate interbank fee and for credit unions to affordably receive, process and settle these payments in near-real time.”