Same Day ACH Continues Its Steady, Impressive Growth

Same Day ACH Continues Its Steady, Impressive Growth

Same Day ACH Continues Its Steady, Impressive Growth

by Glen Sarvady

NACHA’s just-released data on Same-Day Payment volumes shows continued impressive growth for this new payments vehicle.

Through its first quarter of operation, nearly $17 billion of same-day transactions have been processed. Given the $5 billion NACHA previously reported for October- its first month live- this implies month-over-month growth in the 15-20% range. Not exactly a Pokemon Go level of runaway success but hey, we are still talking about ACH here. And I’ll be honest- it’s a far stronger start for Same-Day ACH than I had anticipated.

For those new to the story, in late September the ACH network established two new daily clearing windows, with settlement occurring at 1pm and 5pm Eastern Time. Once fully implemented NACHA estimates that same-day capability will be available for roughly 99% of transactions- the two exceptions being high-value payments (over $25,000) and international money movement.

To date more than half of same-day payments have been for direct deposit, the ACH network’s bread and butter. While “emergency payroll” may be a handy shorthand for this category, same-day capability also opens up use cases for hourly and casual employees whose time reporting deadlines didn’t mesh with the traditional direct deposit model.

Another one-third of same-day transactions, and over half of its overall dollar throughput, has been for B2B payments. It’s important to note that in each of the above examples, businesses are the payment originators. This should not come as a surprise- Phase One of the Same-Day ACH rollout enabled credit transactions, which better align with business needs. Once same-day debit capabilities are rolled out this coming September, consumer use cases will become more logical. If anything, I’m surprised P2P and consumer bill payments have generated as much activity (over 10% of the total) as they have under the current model.

The next steps in the Same-Day ACH growth curve are fairly clear. The ACH network wisely required all endpoints to accept same-day payments at launch; originating these payments, however, is entirely voluntary. Although NACHA hasn’t released stats in this area, it’s reasonable to assume that a disproportionate share of volume is being generated by a handful of FIs that have elected to promote the service- and have presumably built a revenue model for doing so.

An increasing number of FIs will need to jump on the bandwagon to keep the growth engine humming, at least until consumer volumes kick in this fall. Messaging for business customers is presumably more straightforward and efficient to execute- it might even serve as a test run for the consumer opportunity on the horizon- after all, this is a fee opportunity.

For now, Same-Day ACH continues to fly mostly below the radar. However, it’s already demonstrated enough potential to warrant more of FIs’ product planning bandwidth.

 

  • 28 January 2017
  • Author: Glen Sarvady
  • Number of views: 1255
  • Comments: 0
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About BIGcast Network

Credit Union Industry Experts, John Best, Founder of Best Innovation Group (BIG), Glen Sarvady, Managing Principal at 154 Advisors and Anne Legg, Founder of THRIVE Strategic Services have teamed-up to offer a new podcast series to form the BIGcast Network. The BIGcast will become a twice weekly podcast and will be offering financial news and thought leadership in the areas of Business Strategy, Innovation, Payments and Leadership to financial institutions globally. Meet the BIGCast Network Team:

John Best is recognized as a thought leader and visionary of technology advancements and financial application development within the credit union industry. Requests for speaking engagements include Symitar national and regional conferences, Information Technologies Credit Union Association annual conference, and CUNA Technology Council, CUNA Marketing Council, CUNA lending Council Filene Water Cooler Annual Symposium and Correlation annual meeting as a keynote speaker.
Anne Legg is founder of THRIVE Strategic Services. THRIVE leads organizations to goal attainment via data translation resulting in innovative and transformational business strategies. Anne is a recognized credit union expert and thought leader with an MBA thesis on the credit union business model as well as two internationally published whitepapers on credit union business strategy. She has served as an SME for CUNA and National University and has instructed at several CUNA schools.
Glen Sarvady’s episodes of the BIGCast will focus on top-of-mind topics impacting the payments world, analysis of recent product launches, acquisitions, partnerships and innovations, and on-site reporting and interviews from industry venues like Finovate, Money 20/20 and NACHA Payments. Interviews will be brief and to-the-point, emphasizing substance and avoiding informercial territory. As with other BIGCast Network offerings credit unions receive added attention, but the discussions will be relevant and entertaining for strategic thinkers across the financial services spectrum, particularly those interested in consumer and small business experience and the real-world effects of breakthrough payment innovations.

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