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"The ACH network is a vital part of the U.S. economy," Of the enhancements under consideration, weekend
Larimer said. "The robust growth demonstrates that the and holiday processing schedules are most critical to
ACH Network provides substantial value to consumers, achieving faster payments. Interbank payment systems –
businesses and financial institutions that need to make the ACH, check and wire transfer systems – operate on
payments." what once were known as "bankers' hours"— 9 a.m. to 2
p.m. ET. While most now have deposit cutoffs later than 2
A breakdown of ACH transactions suggests the largest p.m., none operate on weekends or holidays.
gains last year were with same-day payments, which
NACHA said grew by 478 percent over 2016. But that's a In my mind, there's a disconnect between this reality and
bit misleading, since 2016 was the first year the same-day the stated objective of faster payments initiatives that
option was available, and then only for ACH credits. promote real-time transactions. Unless and until networks
like the ACH start processing payments 24 hours a day
NACHA said the ACH was used for 75 million same- seven days a week, real-time payments will remain an
day payments in 2017. If the Q1 same-day ACH total elusive goal for the United States.
(42.6 million) is an indication, that 75 million should be
dwarfed by this year's final numbers. Almost all types of Next phase in faster payments quest
ACH payments – 99 percent of current volume – qualify The Federal Reserve has been a vocal champion of faster
for same-day processing. Only international transactions payments. Yet it's the Fed that sets the schedules that
and payments exceeding $25,000 are ineligible under the ACH and other interbank processing networks hold
current NACHA rules. to. (The Fed provides ACH, check and wire processing
services to banks and is sole provider of interbank net
Internet transactions cleared through the ACH, often settlement services.)
associated with consumer online purchases, rose 13.1
percent to 5.2 billion in 2017; person-to-person payments The Fed is well aware of this dichotomy. The need for
rose 23.3 percent to 97 million; business-to-business (B2B) daily, around-the-clock processing capability, including
transactions grew 5.6 percent to total 3.3 billion; and weekends and holidays, was a key recommendation
payroll transactions grew by 5.8 percent to total 6.5 billion. made by the its Faster Payments Task Force, and the
Fed has been making strides toward change. It's been
The ACH is used to clear both credits (like direct deposit working with NACHA, for example, to support same-day
and B2B payments) and debits. Debits accounted for the ACH initiatives like later deposit cut offs and same-day
largest number of transactions processed through the customer funds availability.
ACH last year (12.5 billion); ACH credits totaled 9 billion.
Credits, however, accounted for the largest share of dollars The Faster Payments Task Force was active for three years,
sent through the ACH at $30.2 trillion. The combined wrapping up its work last summer with a call for real-time
value of ACH debits was $16.2 trillion. or near-real-time payments to be widely available by 2020.

Same-day, not real time This would seem a lofty goal, however, considering the
Fed's settlement service still operates on bankers' hours.
With faster, same-day ACH now a reality for credit and
debit transactions, NACHA expects ACH tallies will reach Although the Fed's task force was short lived, it put
new heights. To ensure that eventuality, the ACH rules in place an action plan for continuing work on faster
group is working on enhancements that expand access to payments. The next phase of that plan calls for creation of
same-day processing. These include: a Faster Payments Council and an operating vision. The
• A new, later processing window. Today banks Fed gave several examples of issues the FPC will seek to
must submit same-day ACH files by 10:30 a.m. ET tackle, including infrastructure gaps, safety and security
for settlement at 1 p.m., and by 2:45 p.m. for 5 p.m. practices, end-user awareness, and legal and regulatory
settlement. uncertainties.
• Raising the permissible dollar threshold for "The goal is a ubiquitous, world-class payment system
qualifying transactions to $100,000. in 2020 where Americans can safely and securely pay
• Exploring the feasibility of ACH processing on anyone, anywhere, at any time and with immediate funds
weekends and banking holidays. availability," the Fed explained in a request for industry
feedback on the planned FPC. "From the outset, the FPC
"The ACH network moves tens of billions of payments will focus on pragmatic, private-sector approaches to
across more than 10,000 banks and credit unions," Larimer solving problems and removing barriers to achieving
said in a statement. "The advent and implementation of ubiquity."
same-day ACH allows banks and credit unions to provide
businesses and consumers with a faster electronic payment Patti Murphy is Senior Editor of The Green Sheet and President of
network without compromising reliability or security." ProScribes Inc. Email her at patti@greensheet.com.

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