This week, NACHA announced the timeline of rule implementation proposed for Same Day ACH improvement. The official rules include: 

  1. Faster funds availability to receivers of both Same Day and non-Same Day ACH credits
    Implementation date: September 20, 2019
  2. Increase to the per-transaction dollar limit on Same Day ACH transactions to $100,000 from current $25,000
    Implementation date: March 20, 2020
  3. A third Same Day ACH processing window that expands availability by 2 hours
    Implementation date: September 18, 2020
As the push to real-time marches forward, the new rules may have bankers asking themselves what the impacts to their payment strategy will be. To put it bluntly, not much will change in ACH payment strategies. As highlighted in our Faster and Real-Time Payments: New Players Primed to Overtake Legacy Solutions report, one of the main challenges facing Same Day ACH adoption is that it requires businesses to change their existing payments infrastructure, which has been built around a batch, overnight file disbursement process. Same Day ACH also provides no new information or data that would improve the speed of payment reconciliation, unlike other faster payment mechanisms such as The Clearing House’s Real-Time Payment (RTP) system, which uses the ISO 20022 standard and provides incremental data fields that aid in faster payment reconciliation. 

Frankly, the new rules are nice, but they are not enough and do not address payment infrastructure limitations– or the timeframes faster payments market demand. The rule changes read as a reaction to how fast the market is moving and recognition by NACHA that it is at risk of losing market prominence, especially in B2B payments.

Part of this sea change has been driven by Zelle and its expansion into disbursements (B2C) and, what Javelin Strategy & Research posits is the most natural evolution – B2B payments. As industry professionals Javelin Strategy & Research is consistently discussing the need to breakdown silos, focusing on the ability to consolidate and simplify payments under a common experience that ties consumer and business payments. 

Faster Payments goes beyond Zelle as recent product releases show the speed and efficiency with which the competition is moving – and where NACHA should be taking its cues from:

  1. PayPal Funds Now: Gives select PayPal businesses access to their completed sales within seconds – at no extra cost.1  
    Key differentiators from NACHA include no cost, instant availability, global reach, and access to value-added features beyond payments.
  1. Mastercard Track: Track is rolling out in early 2019, initially with nine B2B networks and procure-to-pay solutions in an effort to ease the onboarding process for buyers and suppliers, provide more stringent risk management, and offer greater payment visibility across multiple B2B networks.2  
    Key differentiators from NACHA include a global scale as well as value-added features beyond payments
More than half of small businesses are looking for faster payment options. The two innovations demonstrate the focus the payments industry is placing on simplifying and speeding up B2B payments – and there are certainly more examples than the ones highlighted. The landscape is ripe for innovation.

NACHA’s market dominance means that it will likely always play a role in payments but that role will continue to diminish if it does not do more – and do it in fast fashion. After all, what does it say about an organization touting faster payments that they cannot implement common sense changes for 12-24 months? If NACHA does not meet market demands other payment providers will fill the needs with other solutions.

----------------



Author

About Rachel Huber

Rachel is an analyst in Javelin’s payments practice. Her focus is on the developing payments industry, with specific interests in e-commerce, person-to-person payments, digital wallets, and generational differences in payment preferences. 

Before joining Javelin, Rachel was an analyst in Fiserv’s global sales organization. She focused on competitive intelligence and thought leadership on emerging technologies in support of the card services division. Rachel began her career in investment management as a sell-side analyst before moving into mutual fund compliance at US Bank.

Rachel holds a BBA in finance and marketing and an MBA with specialization in investment management, both from the University of Wisconsin-Milwaukee’s Lubar School of Business.

Stay in Touch!