NACHA Announces A 6-Month Delay And Blames The Fed For It!
NACHA, the body that runs ACH announced on March 12 that it would delay a third daily processing window for ACH payments for another six months.
The body has been working on the window—a component meant to enable same-day settlement of ACH transactions— for years. The project, previously set to launch on Sept. 18, 2020, will now go live on March 19, 2021.
According to NACHA COO, Jane Larimer, the Federal Reserve is to blame for the delays. The previous launch date depended on NACHA getting some “go ahead” from the Fed’s BOG (board of governors) by June 30, 2019.
Speaking to Digital Transactions News, Larimer said that the Fed told NACHA it wouldn’t be able to make all the necessary approvals for the transformations in its ACH services by June 30. The changes were to impact on the Fedwire Funds Service and the National Settlement Service.
Previously, the Fed had told NACHA to issue a request for public opinion on the impending changes to Federal Reserve services before publicizing to the industry that it would back the new window.
As soon as the window goes live, NACHA will allow the various financial institutions to forward transactions to the network up to 4:45 p.m. Eastern time. But Banks, more so those in Mountain and Pacific time zones requested a change in this deadline.
We are not sure about the consequences this window delay to same-day ACH payments, but it happens at a time when all sorts of payments providers are looking to speed up their processes. One outstanding example is the “Instant transfer to Bank” by PayPal Holdings Inc. which went live on the very day that NACHA announced the delay. PayPal Holdings Inc. is partnering with two other institutions; JPMorgan Chase & Co. and The Clearing House.
“In view of the declaration by PayPal that they’re allowing the instant transfer of funds through Chase and TCH, the window delay could really slow things down,” warns a consultant, Patricia Hewitt of Savannah of PG Research & Advisory Services.
However, Larimer is positive the delay will cause no lasting effects on the payment space, highlighting that the volumes of that same-day transactions are increasing. “Last year, we recorded 178 million same-day transactions, a 137% increase over 2017. In essence, NACHA is looking at a little impact, and more acceptance and use of same-day ACH.”
Author Bio: As the FAM account executive, Michael Hollis has funded millions by using ACH echeck services solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.