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Behind the ACH promo Wire transfer is also a very lucrative business for a major
bank, and the single riskiest business they are in. They
NACHA has been a relentless publicity machine for are not going to cannibalize this for an ACH equivalent.
popularizing the idea that ACH is a better, faster, cheaper In any event, there is a cap of $25,000 on same-day ACH,
way to move money than a check, and it has been pretty which is smaller than most wires anyway.
successful at it, although frankly, it didn't get much Same-day ACH gets a lot of publicity, but we should
traction in the first 20 years. Some people think NACHA is not overlook the efforts by both the Federal Reserve
some kind of quasi-governmental agency, like an offshoot and The Clearing House LLC to build a faster payments
of the Federal Reserve, but the truth is that it is a financial infrastructure, as well as Early Warning Services LLC
institution (FI) industry group. and Dwolla Inc. When you hear that same-day ACH will
change everything, ask yourself if this is myth or reality.
There are, perhaps, fewer than 10 major money center and Sometimes, it's hard to tell. A glass of wine might help.
super-regional banks that originate the majority of the Brandes Elitch, Director of Partner Acquisition for CrossCheck Inc., has
transactions. This is because these banks hold roughly 75 been a cash management practitioner for several Fortune 500 com-
percent of all the demand deposit accounts in the country. panies, sold cash management services for major banks and served
They also bank the largest insurance companies in the as a consultant to bankcard acquirers. A Certified Cash Manager
United States, which were the real early adopters of ACH and Accredited ACH Professional, Brandes has a Master's in Business
for collecting monthly premiums. Administration from New York University and a Juris Doctor from Santa
Clara University. He can be reached at brandese@cross-check.com.
The other 6,000 commercial banks originate minimal
volume; their role is principally as receivers. The 25
originators write the rules. NACHA's role is to codify the
rules for the many standard entry class codes that specify
the file format and record layout for each type
of transaction and the return item rules.

Did you know that NACHA has 84 return item
reason codes? I am not making this up. Up to
now, small banks have never had any revenue
for just receiving transactions, but the new
same-day rules will give them 5.2 cents per
entry or transaction, certainly not meaningful
for a community bank which might receive a
few hundred entries a day.

Ho hum to 5 p.m. availability

Same-day settlement does not obligate anyone
to originate ACH entries, but it does obligate
all financial institutions to settle eligible ACH
credit payments of $25,000 or less the same
day. In September 2017, this will expand to
include debit payments; in March, 2018, the
rule will require FIs to make funds available
to recipients by 5 p.m. local time. Most large
enterprise business-to-business payments are
above $25,000. Making funds available at 5
p.m. is not all that important, as the banking
day is over by then, and the value of balances
today is negligible.

NACHA touts the advantages of expedited bill
pay, a better peer-to-peer payment experience,
and same-day settlement that is cheaper than
a wire transfer.

These same large originators are also the
major credit card issuing banks, and they
have a hefty fee for paying your credit card
payment on the day it is due. I doubt they want
to cannibalize that business model.