2020’s First ACH Rules Change Is COMING!

Karen Nearing

By: Shelly Sipple, AAP, APRP, NCP, Senior Director, Certifications & Continuing Education

It’s a new year, which means new ACH Rules! And there is an abundance in 2020 and beyond. But, instead of overwhelming you with all of them, let’s review the first change going into effect to ensure your institution and account holders are prepared.

Mark your calendar for March 20th, when the dollar limit for an individual Same Day ACH transaction – credit or debit – will be increased from $25,000 to $100,000. This enhancement is long-awaited and welcomed with open arms by ODFIs and originating businesses alike.

Year-end volume statistics show 250.4 million Same Day ACH transactions valued at $247 billion were processed in 2019. Compare this activity to 2018 and Same Day ACH is thriving! Same Day ACH processing in 2019 signified a 41% increase in volume and 55% growth in value over 2018.

Raising the dollar limit provides new opportunities for same-day processing, such as:

  • Increased business-to-business (B2B) payments – Based on Nacha’s analysis of Network volume, 8% of B2B payments will be eligible for same-day processing.
  • Improved capability to create balanced files – In addition to processing 50 payroll entries of $2,000 each as Same Day, an Originator will also be able to process the offsetting $100,000 debit to fund the payroll as Same Day. Thus, they are able to send a balanced file, unlike today.

Originators should know the dollar limitations associated with Accounts Receivable Entries (ARC), Back Office Conversion (BOC), Point of Purchase (POP) and Represented Check Entries (RCK) remain in effect. That is, individual transactions must be $25,000 or less for ARC, BOC and POP; and may be up to $2,500 for RCK entries.

The increased dollar limit affords more origination opportunities; however, processing ACH transactions this way is optional while acceptance of Same Day payments is not. So, what’s the impact to Receivers?

  • ACH payments settle three times throughout the course of a day. While credits can have a positive impact to one’s cash position, debits may have the opposite effect. Account holders could potentially experience intraday overdrafts or even an overnight overdraft if a $100,000 debit is received late in the day.
  • With additional Same Day payments anticipated to be processed, an authorized debit might post to one’s account earlier than expected, or at least earlier than one previously experienced.

Because of how quickly Same Day ACH is processed, Receivers should get into the habit of checking account balances at 5:00 PM local time every day to ensure a positive cash position.

Wondering what your financial institution needs to do in preparation for the March 20th implementation? Join us at Payment Systems Update to find out and learn about the many other ACH Rules changes, including faster payments and the FedNow℠ service, FedACH® resolution service and more. But hurry, seats are filling up fast, so register today!