Phase 3 of Same Day ACH Payment Processing Upon is Us: What Does it Mean?

Phase 3 of Same Day ACH Payment Processing Upon is Us: What Does it Mean?

Phase 3 of the same-day ACH payment conversion is slated to begin March 16, 2018, marking what we feel is a celebratory day in payments. Being a provider of merchant accounts to high risk e-commerce businesses, we applauded in 2016 when NACHA, the governing body that oversees ACH payment processing, announced that it was implementing a conversion to same day ACH settlement over a 2.5 year window with completion in 2018.

We believe wholeheartedly that this conversion is instrumental in keeping ACH payments relevant in the ever-changing payments landscape. When searching the term ACH payment growth, a plethora of articles appear about the steady progress of ACH.

ACH is a vastly underrated method of payment in many ways. Every merchant should offer an ACH or a check solution, especially now.

What Phases 1 and 2 entailed

Originating financial institutions (ODFIs) can facilitate payments through two daily windows, Monday through Friday:

  • A morning submission by 10:30 a.m. eastern time with settlement finalized by 1 p.m.
  • An afternoon submission by 2:45 p.m. eastern time, with settlement finalized by 5 p.m.

For now, all types of ACH payment are eligible for same day processing except for international transactions and transactions higher than $25,000.

Phase 1 of same day ACH payment processing became effective Sept. 23, 2016, when it involved only the processing of ACH credits no higher than $25,000 for a same day settlement. Phase 2 went into motion Sept. 15, 2017 which involved ACH debits (also under $25,000) to be settled the same day.

An example of such a transaction is a company’s typical payday: The ODFI (the company’s bank) releases each employee’s funds directly to each employee’s personal bank (the RDFI or receiving financial institution) the same day every week, biweekly or monthly.

What Phase 3 is all about

The final phase in same day ACH payment processing mandates that all RDFIs are required to receive same day ACH payments and make monies available by 5 p.m. local time. The mandate empowers ODFIs with the confidence in originating and sending payments.

The benefits of ACH payment processing

  • Safe and secure: Other than the person-to-person transfer of cash, ACH payments are the safest and direct form of payment.
  • Here to stay: With same day ACH weeks away from full flight, it remains a competitor of sorts with credit and debit card processing, wallets and other forms of payment.
  • Ever-reliable: ACH payment processing can be a merchant’s go-to method in the event that they lose their merchant account. We’ve seen it happen in the high risk e-commerce environment when an acquiring bank decides not to process payments for a certain industry or when a merchant has their merchant account shut down. ACH is a lifeline until a merchant can regain credit card processing.
  • Cheaper than credit card processing: There are fees with ACH payments, such as per transaction fees and discount rate, but ACH is less expensive than processing credit and debit card transactions.

Instabill offers ACH payment processing

Instabill is partnered with many domestic acquiring banks, several of which specialize in check solutions and are same-day ACH-ready. Along with ACH payment processing, Instabill offers other check solutions such as Check 21 and virtual checks, of which every e-commerce or brick-and-mortar business should take advantage.

Speak one-on-one with a live merchant account manager at 1-800-530-2444 today to discuss the possibilities.

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