Compliance Center: Same Day ACH Is Coming, and More

This month, NACHA – The Electronic Payments Association – published a Request for Comment (RFC) on Same Day automated clearing house (ACH) transactions.   This proposal would provide faster clearing and settlement options for all domestic ACH transactions under $25,000.  All receiving financial institutions (RDFIs) would be required to accept same day ACH transactions in order to provide certainty, ubitquity, and greater choice for consumer, business and government Originators.  This proposal includes a reimbursement fee of 8.2 cents per transaction to be paid by the originating financial institution (ODFI) to the receiving financial institution (RDFI) to assist in recovering average costs related to the implementation and ongoing operational support of same day ACH.   NACHA is accepting comments through February 6, 2015.  

From the inception of the ACH Network in the 1970s, ACH transactions sent between financial institutions have always required a minimum of one business day to settle.   But the demand for enabling same day ACH is heightened due to many factors including improved technological capabilities, the expansion of the types of payments or “use cases” supported by ACH, and similar capabilities that exist in other domestic networks and in other countries.  These factors have resulted in expectations by some users for a faster U.S. electronic payments infrastructure.

The major use cases NACHA identified are listed below, but NACHA has also emphasized that the flexibility built into this proposal allows for the development of additional use cases and products for all participants:

  • Business-to-Business (B2B) Payments (i.e. trading partner, tax payments and remittance)
  • Person-to-Person (P2P) Payments (i.e. reimbursements, financial support, emergencies, loan repayments)
  • Account-to-Account (A2A) Transfers (i.e. consumers transferring funds between accounts at different financial institutions or to populate digital or mobile payments)
  • Business-to-Consumer (B2C) Payments (i.e. same-day payroll,  insurance claims, refunds, rebates, freelance payments)
  • Consumer-to-Business (C2B) Payments (i.e. expedited bill payments, check conversion, merchant debits, collections)

Financial institutions that don’t offer commercial ACH Origination services may realize that some of these business cases may still apply to their online or mobile banking services for bill pay, person-to person, and account-to-account transfers that they offer.

NACHA is proposing a gradual adoption of Same Day ACH with three proposed implementation phases. This is designed to ease the implementation effort for all network participants and allow the industry to acclimate to faster-payments with ACH credits in the first phase, before adding the ACH debit “pull” capability. 

  • In phase one, proposed for September 16, 2016, only ACH credits would be same-day eligible. 
  • In phase two, proposed for a year later in September 15, 2017, ACH debits would become eligible. 
  • In phase three, proposed for March 16, 2018, an additional interbank settlement time of 9 AM PT would be added as well as a more specific availability deadline for RDFIs.  

Click image to enlarge.

In phases one and two, RDFIs would have to make their received same-day ACH transactions available by their own end-of-processing day, however they define it.  In phase three, availability would be required by 5 PM local time.  

Two new same day processing windows would be established at 7 AM PT and 12 PM PT for ODFIs to submit their same-day files to their ACH Operator.  These files would be made available to the RDFIs approximately one hour later.  Intra-bank settlement for these files would occur at 9 AM PT and 2 PM PT respectively. 

NACHA’s proposed same-day schedule is an attempt to balance access to the network for participants across the U.S’s multiple time-zones and still adhere to the Federal Reserve’s National Net Settlement System 3:30 PM PT end-of-day deadline.

The benefit for enabling same-day ACH is readily evident for originating financial institutions offering Same Day ACH products and services to their consumer, business and government ACH Originators and Third Parties.

NACHA consulted with an external expert consulting firm to independently evaluate the benefits and costs of Same Day ACH for both ODFIs and RDFIs. The surveys distributed by WesPay in the summer of 2014 to our members provided important insights to this work.  After compiling the data from nearly 200 surveys and interviews with institutions of all sizes, a proposed interbank fee of 8.2 cents per transaction to be paid by the ODFI to the RDFI is proposed. This is designed to help offset RDFIs’ average cost for implementing and supporting Same Day ACH in their critical role in enabling network ubiquity.

In 2012, NACHA proposed an Expedited Processing and Settlement (EPS) Rule that was voted down.  NACHA has tailored this current proposal based upon feedback they have received since then, including:

  • A phased approach starting with lesser-risk ACH credits to help the industry adapt to Same Day ACH  before introducing higher-risk same-day ACH debits
  • Funds-availability certainty for same-day ACH credits
  • An early-morning Same Day window for faster settlement of transactions that are too late for overnight processing
  • Two new same-day windows to spread volume throughout the day and better accommodate Western U.S. financial institutions

This proposal is designed to be one of the key improvements to the U.S. payments system that can help create a bridge from today’s payments to those of the future.  We encourage all participants to familiarize themselves with this proposal and provide feedback either to NACHA directly, or to WesPay, for inclusion in our response. You can do this by contacting Chris Selmi at cselmi@wespay.org.

For more information about the proposed rules and how to submit comments, please visit NACHA’s website at https://www.nacha.org/rules/proposed.

Compliance Question of the Week

If a member deposits $6,000 in cash and withdraws $5,000 in cash on the same day, is the credit union required to file a Currency Transaction Report (CTR)? 

No.  These transactions should not be aggregated. 

The Bank Secrecy Act (BSA) requires a credit union to file a CTR for each transaction that results in cash in or cash out totaling more than $10,000 and multiple transactions in a single business day are considered a single transaction for CTR purposes.  When the credit union is aggregating its transactions, however, cash in transactions must be kept separate from cash out transactions.  A CTR is required if the total cash in OR cash out totals more than $10,000, not of the total of both exceeds $10,000.

Related Links:

Legal Briefs

National Credit Union Administration (NCUA)

NCUA Chairman Matz announced that the NCUA will hold a town hall webinar with CFPB Director Cordray on Tuesday, February 10, 2015. You can register for the town hall here.

The January issue of the NCUA Report is now available. The report details the NCUA’s 2015 supervision priorities.

The NCUA announced that it will host a webinar on the revised risk-based capital proposal on Wednesday, January 21, 2014.  If you wish to attend the webinar, you can register here.

The NCUA has posted a video of their December 11, 2014 open board meeting.

The NCUA released a Board Action Bulletin detailing the outcome of the January 2015 Board Meeting. The Bulletin includes an overview of the changes made to the Risk-Based Capital proposed rule.

The NCUA released a legal opinion letter on the Revised Proposed Risk-Based Capital Rule.

Consumer Financial Protection Bureau (CFPB)

The CFPB announced that it is looking for input on a Safe Student Account Scorecard.  The goal of the scorecard is to help colleges avoid partnering with financial institutions that are deceptive about the fees associated with specific accounts.

The CFPB released a report about shopping for mortgages. The report states that almost half of the borrowers in the report did not shop for a mortgage.

The CFPB also announced that it is accepting applications for its Consumer Advisory Board, Credit Union Advisory Council, and the Community Bank Advisory Council.

Federal Trade Commission (FTC)

The FTC has released information directed towards helping consumers avoid tax related identity theft during the 2015 tax season. 

Federal Housing Finance Agency (FHFA)

The FHFA has released its 2015 Scorecard.

Financial Crimes Enforcement Network (FinCEN)

FinCEN issued a letter to the American Gaming Association regarding sports betting.

Federal Reserve Bank (FRB)

The minutes of the FRB’s November and December Discount Rate Meetings are now available.

The FRB has published the January 2015 issue of the Beige Book.

The 2015 issue of FedFlash is now available.

Federal Deposit Insurance Corporation

The FDIC announced that it will hold an open Board Meeting on Wednesday, January 21. Among other topics, the agenda for the meeting includes review of FDIC regulations.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of January 16, 2015. The last update prior to this was January 14, 2015.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, NCUA.