Third Phase of Same-Day ACH Implementation Begins

• The third phase of same-day ACH began March 16, 2018, requiring financial institutions to make credits received in a same-day ACH window available for withdrawal by 5 p.m. local time.
• Prior to same-day ACH, automated clearinghouse payments were settled on the next business day.
• On Sept. 23, 2016, U.S. businesses using direct deposit to pay employees gained the ability to use same-day ACH service.
• Same-day ACH gives employers the flexibility to pay staff via direct deposit the day they initiate payroll.

Same-day ACH accelerates the speed of many payments

As of Sept. 23, 2016, U.S. businesses using direct deposit to pay employees gained the ability to use same-day automated clearinghouse (ACH) service — giving employers the flexibility to pay staff via direct deposit the day they initiate payroll. ACH is an electronic batch-processing system to administer direct deposits and direct payments.

NACHA, the Electronic Payments Association, developed a three-phase approach to assist financial institutions in implementing same-day ACH. The third phase took effect on March 16, 2018, requiring financial institutions to make credits received in a same-day ACH window available for withdrawal by 5 p.m. local time. Previously, they had to make funds available by the end of their processing day.

Prior to same-day ACH, automated clearinghouse payments were settled on the next business day. Employers paying wages through direct deposit would need to initiate the payments through their bank at least one banking day prior to the employees’ payroll check date. But with same-day ACH, direct deposit payments can be sent to and received by employees on the payroll check date.

Phases one and two prepared businesses and Financial Institutions in stepwise fashion

Phase one of NACHA's same-day ACH implementation began September 23, 2016, allowing for credits of up to $25,000 to be sent via same day ACH. Financial institutions receiving same-day credits were required to post them to the receivers' accounts by the end of their processing day.

Phase two, which allowed for same-day ACH debits, took effect September 15, 2017.

NACHA reports that in 2017 the volume of same-day ACH transactions reached 75.1 million. These payments totaled $87.1 billion transferred — an average of $1,161 per payment.

Same-day ACH gives workers a set time to access their earnings

Now, in phase three, when a business processes a same-day ACH payroll, all eligible ACH credits ($25,000 and under, not international ACH transactions), will be available to its employees by 5 p.m. local time. Employees appreciate a set time for funds availability. Prior to March 16, financial institutions could post payments any time before the end of their processing day — which for some could run late into the evening. The times that employees could withdraw their funds could vary among staff, sometimes causing confusion.

A number of financial institutions, however, were already making funds available by 5 p.m., before the March 16 deadline.

Virtually all types of ACH payments are eligible for same-day processing. However, international transactions and high-value transactions above $25,000 are not. NACHA's online resource center has a wealth of information to assist employers making the shift to faster payments.

NACHA investigates expanding reach of same-day ACH

Recently NACHA sent out a request for comment to learn the level of industry interest in

• Adding a third same-day ACH processing window that expands access to later in the day. Currently, the final window for financial institutions to process same-day ACH transactions to the ACH operators is 2:45 p.m. Eastern time. However, Financial Institutions and businesses have earlier deadlines for their customers;
• Providing faster funds availability to receivers of both same-day and non-same-day ACH credits;
• Raising the per-transaction dollar limit on same-day ACH transactions from $25,000 to $100,000; and
• Exploring industry interest in ACH processing on weekends and holidays.

Paychex will continue to monitor same-day ACH developments to keep you informed. Paychex also offers direct deposit via ACH, and can provide assistance to your business in adopting same-day processing.

About the Authors

Rebecca Wagner, Sr. Compliance Analyst

Rebecca Wagner is a senior compliance analyst at Paychex (a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services for small and medium-sized businesses), where she’s been a member of the team for 19 years. She has over 30 years of experience in payments, is an Accredited ACH Professional (AAP) and was a member of the Federal Reserve’s Faster Payments Task Force, a group that formed to develop criteria for a safe, ubiquitous, and real-time payments system in the U.S.

Laura Cottrell, Compliance Analyst

Laura Cottrell is a compliance analyst at Paychex, a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services for small and medium-sized businesses. She also serves as the chair of the American Payroll Association’s (APA) Electronic Payments Committee, volunteers as a member of the APA’s Payroll Card Subcommittee of the Government Relations Task Force, and is an Accredited ACH Professional (AAP). She has been with Paychex for close to 25 years.

A previous version of this article was published August 10, 2017.