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February 27, 2017 • Issue 17:02:02

Progress on the long road

to faster payments

Proponents of same-day ACH hope shorter ACH
settlement windows will encourage more businesses to
abandon checks in favor of electronic payments. While
check usage continues to fall, the latest data from the
Federal Reserve suggests the decline has tapered off to
an annual rate of less than 5 percent. Meanwhile, the 2016
Electronic Payments Survey by the Association for Financial
Professionals found use of paper checks for business-to-
business (B2B) payments actually rose 1 percent between
2013 and 2016.
It's not that businesses lack interest in same-day ACH. It
just may not be an everyday requirement. In discussing
the findings, Jim Kaitz, President and Chief Executive
Officer of the AFP, said that the treasury and finance
professionals AFP surveyed "see the value that it [same-
By Patti Murphy day ACH] brings to last-minute payments."

he automated clearing house (ACH) system According to NACHA, of the more than 13 million
achieved a major milestone in late 2016 when, payments submitted for same-day ACH settlement
under the guidance and rulemaking author- between Sept. 23, 2016, when same-day ACH rules took
T ity of NACHA – The Electronic Payments effect, and Dec. 31, 2016, 52 percent were direct deposit
Association, it embarked on a transition to same-day transactions. Businesses have long complained that direct
settlement. Going forward, person-to-person (P2P) pay- deposit is not an effective option for hourly employees,
ments could be the initiative's driving force. for example, because of the two-day lag between when
employers deposit payment files and funds are available
The ACH was created in the 1970s as a semi-electronic to payees.
alternative to check payments. Over time, the network
became fully electronic (from initiation through B2B payments represented 31 percent of all same-day ACH
settlement), but settlement schedules continued to mimic payments during that period, P2P transactions accounted
the multiday approach of check clearing.

Ironically, some of the technologies and processes evolved
to accommodate faster ACH payments, combined with Contributed articles inside by:
legal/regulatory changes, also have made checks faster.
With the combination of mobile remote deposit capture John Tucker .............................................................................................40
(RDC) and image check clearing, checks, too, can be
same-day payments, noted Louise Steller, Vice President, Adam Atlas ..............................................................................................42
Product Strategy, at Ensenta Corp., a mobile banking Don Bush .................................................................................................44
software company. "We're seeing a lot of movement in that
direction," Steller said. TOC on page 3

Continued on page 35