This column was previously called Ask Mary.
Dear Hoot-E, where are we with Same Day ACH?
It is hard to believe that it has been almost six years since we were first introduced to the concept of same-day ACH processing. In the ensuing years, we’ve seen Same Day ACH (SDA) evolve into what it is today – a vital, important tool in your payments arsenal.
The next step in our journey went into effect on March 19, 2021. The opening of a new, third processing window will provide even more flexibility to Originators/Third-Party Senders wishing to process Entries more quickly. This new window allows for initiation of Same Day ACH Entries for an additional two hours each banking day. Let’s take a deeper look at what this new opportunity will mean to the players in the Network.
*All processing times are provided in Eastern Time. Keep this in mind as you’re making plans to accommodate the new requirements.
*The “settlement” date in the chart above addresses when you, as the RDFI, will receive the funds for the file in your Federal Reserve account – it does not refer to settlement of the Entries in your accountholder’s account.
Per Subsection 3.3.1.2 of the ACH Rules, a Same Day ACH credit Entry received in the third processing window must be made available in the Receiver’s account no later than the completion of the RDFI’s processing for that Settlement Date (subject to its right to return the Entry). While the funds do not have to be available for withdrawal on that date, they must be in the account to cover any incoming debits.
Be mindful that this final file could also contain next-day payments, and those are not subject to the same availability requirements. If you want to make these payments available along with the SDA credits, that’s a business decision for your financial institution. If you do elect to make those Entries available, make sure you understand the possible impact to your Federal Reserve account balance.
In addition to your Ask Hoot-E question, we have received additional questions about the possible impact of this new availability requirement on RDFI staffing. Simply stated, if your existing procedures do not accommodate picking up this third Same Day ACH file from the Federal Reserve, you will need to make changes. Here are a few scenarios we have encountered:
Our current processing day ends an hour before the file becomes available. Can we just process the last SDA file on the next business day?
No – you cannot elect to “ignore” the last SDA file because your processing day ends prior to the receipt of that file from the Federal Reserve. You will need to change your processes to be able to pull in that final file for processing.
Our branch closes at 2:00. Does the new Rule mean we will have to have staff available in the office every day to get that last file?
The Rules require those SDA credits coming in during the last window to be made available by the end of the processing day. This may mean you need to have staff at your branch to make that happen. If your core processor can accommodate the requirement programmatically, a physical body in the building may not necessarily be required.
We’ve always processed our returns the day after we receive a file. With this 5:30 ET file, will we need to have staff available to process those returns that evening as well?
No – you can process your returns the next day, as you always have. Return timeframes have not changed. However, keep in mind that SDA Entries “start the clock ticking” a bit earlier since you receive them the same day they settle. As long as you are getting returns out the door so they are to the ODFI by opening of business the second banking day after settlement, you are in compliance. Do remember that return entries are also eligible for SDA processing, so if you get in a bind, you can use this handy method to get your returns processed!
If your financial institution is an ODFI, you will need to consider how this new functionality might impact your Originator/Third-Party Sender relationships. Some things to consider include:
- Will you offer the service to your Originators/Third-Party Senders?
- Will you charge your Originator/Third-Party Sender for the service?
- Will processing through the new window be charged differently than the first two windows?
You may need to update your Agreements with your business clients to include or exclude the option, and to disclose fees. You might also benefit from making sure your business clients understand the Effective Entry Date on their files and how that could sometimes unintentionally create a same-day transaction. Educate your clients with our Did You Know videos on YouTube and our website, including our newest video about ACH File Holders.
The payments world continues to evolve, and if we had a crystal ball, we might see even more extended processing in the future. It may even already be here, if you are a financial institution that is working with The Clearing House’s Real-Time Payments network. As providers of services to clients, we will likely continue to see a push towards more real-time processing and will have to adjust our sometimes- antiquated ways of working to meet the increasing consumer demand to move money when and how they want.
Learn More by Streaming Payment Systems Update!
This year’s Payment Systems Update is now streaming to a device near you via a series of three two-hour webinars. Multiple dates of each webinar will be offered, and those who subscribe to the entire series will receive the recordings. Sign up today to learn what you need to know about key changes coming in 2021 including Same Day ACH processing updates, FedNow, RTP and more. Subscribe today!
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