Same-Day ACH: What’s Next?
Commonwealth AFP
May 16, 2012
Presented by:
Steven Cordray
Federal Reserve Bank of Atlanta
steven.cordray@atl.frb.org
(404) 498-7072
Discussion Topics
Internal FR
•
ACH Overview
•
Federal Reserve’s SameDay ACH Service
•
Looking Ahead
•
NACHA’s Expedited Processing and Settlement (EPS) Proposal
2
Internal FR
ACH Overview
3
ACH Overview
Internal FR
4
Internal FR
SameDay ACH Service from FedACH
5
FedACH SameDay Service - Overview
Internal FR
• Phase 1:
Allows converted check payments (ARC, BOC, POP, and RCK) as well as TEL and
WEB payments. Includes support for mobile debit payments.
Supports 37 percent of all payments by volume. Majority of remaining nonsupported payments are typically scheduled on a recurring basis and consequently
do not require expedited processing.
FedACH intra-operator (no EPN) only service.
Origination is limited to non-government payments.
Service commenced on August 2, 2010.
6
Comparison of Forward/Return Payment Deadlines in ET
Internal FR
Next-Day Service
(all forward/return payments)
SameDay Service
(SameDay-eligible forward payments)
Input file from ODFI
2:15 a.m.
2 p.m.
Output file to RDFI
6 a.m.
4 p.m.
Settlement
8:30 a.m. (credits), 11 a.m. (debits)
5 p.m.
Immediate Service
(all return payments)
SameDay Return Service
(SameDay-eligible return payments)
Input file from ODFI
2 p.m.
4:30 p.m.
Output file to RDFI
4 p.m.
5 p.m.
Settlement
5 p.m.
5:30 p.m.
7
Forward/Return Payment Flows in ET
Internal FR
Forward/return: Input file by 2:15 am, output file by 6 am, settlement of credit payments at 8:30 am and debit payments at 11 am ET
Forward Payment
Originated by 2:15 am
Return Received
End of Processing Day
End of Processing Day
FedACH
Next-Day
3 am
3 am
Day 3
Day 2
Day 1
Day 0
3 am
End of Processing Day
Forward Payment
Received by 6 am
Four options for returning payment by day 3. If SameDay eligible return, two additional options are available.
Return payment no
later than opening of
business on second
banking day after
settlement
SameDay-eligible forward/return: Input file by 2 pm, output file by 4 pm, settlement of debit payments at 5 pm ET
Forward Payment
Originated by 2 pm
Return Received
Forward Payment
Received by 4 pm
3 am
3 am
3 am
Day 0
End of Processing Day
End of Processing Day
End of Processing Day
FedACH
SameDay
Day 1
Five options for returning payment by day 2.
Day 2
Day 3
Return payment no
later than opening
of business on
second banking day
after settlement
8
Technical and Participation Requirements
Internal FR
•
For return of SameDay forward items, the current return deadline rules apply.
•
Same-day and next-day payments can be included in the ACH input file and can
be comingled in the same payment batch. Non-eligible payments will settle next
day.
•
Payments must be originated and received through FedACH.
•
Service is opt-in for both the ODFI and RDFI, by agreement, and is available to
any FedACH customer.
•
For each RTN, participants may choose to be an ODFI-only, an RDFI-only, or both
for forward payments.
•
RDFI may elect to be either a multilateral or unilateral participant.
o Multilateral Participants: Allows receipt of payments from all ODFI
participants.
o Unilateral Participants: Allows receipt of payments from one or more ODFI
participants; RDFI specifies ODFI(s) in the unilateral participant agreement.
9
Phase 1 Key Points and Benefits
Internal FR
•
Avoids unnecessary industry investment by being an opt-in service. Banks not
interested in the service do not have to make any investments in it. The flip-side is
that this reduces the advantages of a universal service.
•
Banks can control the pace and level of participation in SameDay.
•
Participants may be an ODFI-only, an RDFI-only, or both an ODFI and RDFI.
•
The RDFI may open up or restrict usage for on-us and on-we payments.
•
Service uses existing “immediate” 2 p.m. ET exchange window that is used primarily
for returns today.
•
Offers alternative to private exchange of consumer ACH debit payments.
•
Avoids high upfront and ongoing cost for negotiating and managing private exchange
relationships.
•
Brings consumer debit payments back into the ACH network so that they are subject
to NACHA rules, operator edits, and risk monitoring tools.
10
Phase 1 Key Points and Benefits (continued)
Internal FR
•
Positions ACH to support mobile payments, emerging P2P, and other spontaneous
purchases.
•
Competes with other same-day clearing channels like check/image, debit, credit.
•
Funds availability is moved up a day between ODFI and RDFI.
•
Aligns receipt of funds more closely with posting timelines.
•
Expedites returns by at least one day and as early as the same day the forward item
is originated. No return fees encourages use of SameDay return service. Many
corporate originators have stated that earlier returns is the biggest draw in using
SameDay. No NACHA rule change required.
•
Reduces fraud, collections, and charge-offs.
•
Reduces receiver float.
11
Key Observations
Internal FR
•
Participation from banks in the opt-in service has been very limited
•
Limiting the service to consumer debits has diminished its appeal to originating
banks due to the low interest rate environment
•
Major vendors, such as Fiserv, have released bank software that supports
same day capabilities
•
Corporate views on service is mixed:
o value of service is limited without broad, network-wide participation
o to possibly increase adoption, service should be expanded to include
credits and other debits
o Dollar caps, if any, should be high enough to meet cash concentration
needs and same-day payroll applications
•
Federal Reserve is participating in NACHA’s Expedited Processing and
Settlement (EPS) initiative
12
Internal FR
Looking Ahead
13
Looking Ahead: Same-Day Consumer Payment Applications
Internal FR
Consumer-to-Consumer (C2C)




 Supported
 Partially Supported
 Not supported
Mobile P2P payments using debit pull, credit push, or “split payment” model
Emergency payments to cover rent or food
Transfer urgently required funds to a close relative or friend in another part of the country
Account-to-account transfers between personal accounts (push and pull)
Consumer-to-Business (C2B)
 Clear ad hoc (non-scheduled) debit payments (e.g., converted checks, telephone, and
Internet payments) same-day to accelerate funds availability by one day
 Clear ad hoc (non-scheduled) debit payments (e.g., converted checks, telephone, and
Internet payments) same-day to accelerate returns by one day
 “Just-in-time” payment of a credit card or other bill, in order to avoid penalty fees
 Telephone or Internet purchase, where delivery is required for a specific date, e.g., birthday,
theatre tickets for tonight
 Mobile point-of-sale payments using debit pull, credit push, or “split payment” model
 Transfer of a relatively large amount of funds to ensure that a purchasing opportunity is not
lost, e.g., used car purchase or rental deposit
14
Looking Ahead: Same-Day Business Payment Applications
Internal FR
Business-to-Consumer (B2C)





 Supported
 Partially Supported
 Not Supported
Salary payments to hourly and temporary employees
Same-day payment for terminated employees
Contingency payroll
Reversal of payroll and other benefit payments
Payment of expenses to staff, where these are claimed after the payroll closing date
Business-to-Business (B2B)




Cash concentration (push and pull)
Tax payments
Payments requiring immediate funds before goods are released
Payment for time-critical goods where trade credit is unavailable from the supplier
15
Internal FR
NACHA’s Expedited Processing and
Settlement (EPS) Proposal
16
Comparison Between FedACH SameDay Service and
NACHA Expedited Processing and Settlement (EPS) Service
Internal FR
FedACH SameDay Service
EPS Service
Participation
Opt-In for ODFI and RDFI
Mandatory
ACH Operator
FedACH Only
All
Payment Types
Consumer
Consumer, Commercial, Government
SEC Codes
ARC, BOC, POP, RCK, TEL, WEB
All
Dollar Cap
$25,000: ARC, BOC, POP
$2,500: RCK
Unlimited: TEL, WEB
$25,000: ARC, BOC, POP
$2,500: RCK, XCK
$25,000 or $100,000: All Other SEC Codes
Forward Schedule
Input
Output
Settlement
2 pm ET
4 pm
5 pm
Same
Return Schedule
Input
Output
Settlement
4:30 pm ET
5 pm
5:30 pm
Offered at ACH Operator Discretion
Return Deadline
Two business days after settlement day
Same
Standard ACH File Format
Yes
Yes
17
EPS Milestones
Internal FR
•
Request for Comment (RFC) issued – September 23, 2011
•
RFC response due date – December 12, 2011
•
NACHA analysis and review of RFC responses – 1st Half 2012
18
Additional Resources
Internal FR
•
More detailed information is available at
o http://frbservices.org/serviceofferings/fedach/sameday_service.html
•
Fee information is available at
o http://FRBservices.org/servicefees/
•
Visit My FedDirectory® for contact information
o http://FRBservices.org/contacts/
•
FedACH SameDay Service Participant Lists
o http://frbservices.org/serviceofferings/fedach/sameday_service.html
19