- Starting Sept. 15, 2017, U.S. businesses can use same-day automated clearinghouse (ACH) service for debits, vastly speeding the processing of virtually any ACH payment.
- Small companies using same-day debit service may collect funds from customers more quickly.
- Businesses gained the ability to use same-day ACH for payments on Sept. 23, 2016, allowing them to pay staff via direct deposit on the same-day they initiate payroll.
Same-day ACH for debits joins same-day ACH credits
On Sept. 15, 2017, same-day ACH will be available for debit entries, enabling the processing of virtually any ACH payment on the day it’s initiated. NACHA, the Electronic Payments Association, notes that “All consumers, businesses, government entities and financial institutions that use the ACH network to move money between bank accounts will benefit from the option to move ACH payments faster.”
Virtually all types of ACH payments — credits and debits — are eligible for same-day processing. However, international transactions and transactions above $25,000 are not eligible.
ACH used by a majority of U.S. businesses
NACHA reports that 82 percent of U.S. workers receive their pay using direct deposit via ACH, an electronic batch-processing system, to administer direct deposits and direct payments. ACH encompasses “the deposit of funds for payroll, employee expense reimbursement, government benefits, tax and other refunds, and annuities and interest payments.” With the advent of same-day ACH for debits, businesses now have the opportunity to both receive and pay funds more quickly.
- Businesses engaged in more than 13 million same-day credit transactions totaling nearly $17 billion.
- Same-day direct deposits made up 52 percent of same-day ACH volume.
- Business-to-business transactions made up 32 percent of same-day ACH.
- Person-to-person payments constituted 13.5 percent of same-day volume;
- Consumer bill payments composed the remaining 2 percent.
Same-day ACH facilitates numerous business processes, including:
- Same-day payrolls — Supports payment for hourly workers, and allows flexibility for late and emergency payrolls and missed deadlines. In such cases, workers have quicker access to their wages.
- Business-to-business payments — Enables prompt settlement of invoice payments between business partners, and can include remittance information.
- Expedites bill payments using both ACH credits and debits — Helps consumers pay bills on time and provides faster crediting for late payments.
- Account-to-account transfers — Provides quicker crediting for businesses who move money among various accounts.
If your company doesn’t yet use same-day ACH, consider the many benefits in hours saved, convenience, and accuracy it can yield. Check with your financial institution or payroll processor on same-day ACH debit and credit opportunities to help you improve cash flow. Though all U.S. financial institutions must receive and post same-day ACH transactions, originating them is optional for banks, credit unions, and payroll processors.
10 recommendations from Faster Payments Task Force
In addition to same-day ACH, there are a number of efforts to speed up payments in the U.S. Recently, a coalition of more than 300 payments-industry stakeholders — including Paychex — worked to chart a course for modernizing the U.S. payments system. Leaders from the Faster Payments Task Force announced 10 recommendations to make payments faster and more convenient for everyone and called upon the entire payments industry to continue collaborating to establish a ubiquitous way for people and institutions to make and receive payments. These recommendations focus on three key areas — governance and regulation, infrastructure, and sustainability and evolution. Additionally, the task force highlighted 16 faster solution proposals that were assessed and discussed how they represent a significant step forward in innovation towards making the U.S. payment system faster and safer.
Learn more about this unprecedented industry effort by reading The U.S. Path to Faster Payments, Final Report Part Two: A Call to Action. Paychex will continue to contribute to the discussion to develop a safe, ubiquitous, and speedy payments system.
About the Authors
Rebecca Wagner, Sr. Compliance Analyst
Rebecca Wagner is a senior compliance analyst at Paychex (a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services for small and medium-sized businesses), where she’s been a member of the team for 19 years. She has over 30 years of experience in payments, is an Accredited ACH Professional (AAP) and was a member of the Federal Reserve’s Faster Payments Task Force, a group that formed to develop criteria for a safe, ubiquitous, and real-time payments system in the U.S.
Laura Cottrell, Compliance Analyst
Laura Cottrell is a compliance analyst at Paychex, a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services for small and medium-sized businesses. She also serves as the chair of the American Payroll Association’s (APA) Electronic Payments Committee, volunteers as a member of the APA’s Payroll Card Subcommittee of the Government Relations Task Force, and is an Accredited ACH Professional (AAP). She has been with Paychex for close to 25 years.