Same Day ACH FAQs. Overview. Types of transactions. Opting in now or later

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1 Same Day ACH Same Day ACH FAQs Overview 2018 Guide Since the Same Day ACH rule changes have been the most significant changes in NACHA history, you probably have a lot of questions. The following are responses to questions we received from clients about Same Day ACH. Types of transactions Q: Are ACH credit transactions credited to (or deposited into) the owner's account or the receiver's account? An ACH credit refers to a disbursement from the owner's account that is credited to (deposited into) a receiver's account. For example, a payroll disbursement is an ACH credit to the employee's account. An ACH debit is used to collect a payment for a good or service from a receiver s consumer or business account. ACH credits or debits are based on what happens to the receiver s account. Q: Do you know whether Same Day ACH will ever be available for international payments? Q: Can I send a federal tax payment to the IRS via Same Day ACH? At this time international ACH payments are not supported. Due to time zone differences and compliance requirements, we do not foresee this changing anytime soon. The IRS is not accepting Same Day ACH payments at this time, but is preparing to accept Same Day ACH credits (not debits) in the future. The IRS does accept wire transfers, so if you have an urgent need to make a tax payment you can do so using SinglePoint or via a telephone-initiated wire transfer. We will update the website when new information becomes available. Opting in now or later Q: Is there a deadline to sign up for Same Day ACH? If you have a business bank account, you are automatically able to receive Same Day ACH. If you have the SinglePoint or SinglePoint Essentials ACH Origination service, ACH Direct File Transmission or Consolidated Payables, you can sign up for Same Day ACH at any time, so you re ready to originate credit payments such as payroll and refunds when you have an urgent need. If you use other products or services at U.S. Bank that utilize ACH origination, please check with your Treasury Management consultant or Relationship Manager to inquire if that service offers Same Day ACH origination. You can add optional Same Day ACH processing at any time to benefit from same-day credit and debit origination.

2 Opting in now or later Q: What do I need to do to start sending Same Day ACH? You will need to sign up in order to send Same Day ACH payments. Start by contacting your Treasury Management Consultant or Relationship Manager to begin the implementation process and obtain pricing on Same Day ACH. You will need to download and complete these form(s) from the U.S. Bank 2018 ACH Rule Change website at: (use access code: fastach16): Complete the ACH Authorization form to add Same Day ACH. If you use an ACH transmission service including NACHA and non-nacha transmission services or Consolidated Payables, complete the Same Day ACH Transmission Setup Template. Send the completed forms through secure to your Treasury Management Consultant or Relationship Manager. Prepare your organization today by reviewing the Same Day ACH Checklist provided on the U.S. Bank 2018 ACH Rule Change website. Q: Is it necessary to be set up for Same Day ACH in advance in order to use it in an emergency, for example, a missed payroll? Q. Can this service be selective? Are there fees for the service and/or by each transaction? Q: If we haven't signed up for Same Day ACH and I send a file with an effective date of today, but I don't care if the transaction goes same day, would we incur any additional fees? Q: We don't have to opt in to receive Same Day ACH payments, correct? Although we have an optional exception process for handling emergency payrolls on a same-day basis, which could involve additional fees, we recommend that you sign up for Same Day ACH proactively to be prepared for an emergency need. We will make every effort to assist you. For ACH Direct File Transmission, once you have opted in, you are able to control which of your files are processed as same-day transactions by only using an Effective Entry Date of the current day when you truly want same-day processing. For SinglePoint or SinglePoint Essentials ACH Origination, requesting Same Day ACH processing requires deliberate action. For example, you need to check the Same Day ACH checkbox in the ACH template in order to use it for a sameday batch. Note that additional per item fees apply for the expedited delivery offered by Same Day ACH. If you haven't signed up, your payments to other banks will be assigned a NEXT-day effective date and you would not incur any additional fees. Payments destined for other U.S. Bank accounts with today s effective date will continue to settle same day (as they do today) with no additional fees. If you do sign up for Same Day ACH and you send a file with an effective date of the current day, we will send those items as same-day transactions as long as they meet the same-day requirements. Additional per item fees would apply. That's right! You do not need to opt in to receive Same Day ACH items. Page 2 of 8

3 Transaction limits Q: Is the $25,000 limit per item or per file? For payroll would each employee be considered a transaction if under $25,000 per employee? The $25,000 limit is per transaction. The limit would apply for each employee or per unique invoice number. As long as you follow this guideline, your file may contain multiple $25,000 transactions. Q: Is the $25,000 limit a NACHA rule or a U.S. Bank rule? Q: Why does Same Day ACH have a $25,000 dollar limit and will that change in the future? Q: If our existing ACH file includes one payment over $25,000 but we want the rest to be paid same day and the file reflects today's effective date, will the one payment over $25,000 be sent the following day or will it reject? Q: Can we send four different ACH batches with $25,000 to the same payee? So, it would be a total of $100,000. Or, what's the maximum number of transactions to ONE PAYEE? Q: We currently use ACH for payments in the millions. What does this limitation pertain to? The $25,000 per transaction limit is a NACHA rule and applies to all banks. The ACH rules network implemented a dollar limit for Same Day ACH payments due to risk concerns. Industry security experts think that a faster ACH might also be attractive to fraudsters; so the industry opted to initially set the $25,000 limit as one way to help mitigate this risk. Bear in mind that the majority of ACH transactions processed today are under $25,000. We will send all eligible payments same-day and send payments over $25,000 as next-day transactions. We recommend that you use the Same Day ACH Status report to see which of your items were processed as same day and which were not. The ACH rules specify that a payment should not be split into multiple payments in an attempt to evade the $25,000 per transaction limit. NACHA has advised that the $25,000 transaction limit applies per ACH receiver per unique invoice number. So, if you are paying a receiver for multiple unique invoices, your payments to that receiver could exceed $25,000. The $25,000 is a per transaction limit for Same Day ACH delivery. Transaction timing Q: What are the final deadlines for Same Day ACH transactions? Q: Is the 12 noon deadline in the local time zone or Central Time? The final deadlines for submitting Same Day ACH transactions vary by initiation method: The ACH Direct File Transmission deadline is Noon CT. The SinglePoint ACH Origination deadline is 11:15 a.m. CT. The deadline for non-nacha formatted files and Consolidated Payables is 10:45 a.m. CT. All deadlines listed are in Central Time. Page 3 of 8

4 Transaction timing Q: How will I know if I miss the deadline? If you originate via SinglePoint, the system has built-in validation to ensure that your transactions meet the Same Day ACH deadline. If you miss the Same Day ACH deadline, items that could not be sent via Same Day ACH (whether due to missing the deadline, exceeding $25,000 or because of other exceptions), will appear on the Same Day ACH Status report. As a default, items that cannot be sent via Same Day ACH will be processed with a next-day effective date. You can track the status of your ACH files and perform direct queries into the ACH system via the SinglePoint ACH Warehouse Search service. Q: What are my options if I miss the deadline? Q: When will the receiver of a Same Day ACH payment see it in their account? If I send a Same Day ACH credit, when can the recipient have access to that money (i.e. withdraw from ATM). Q: When will the sender's bank account be debited or credited? As the batch is processed or at the end of the day? Q: What if I accidentally debit a receiver early? If you miss the Same Day ACH deadline, as a default, your items will be processed with a next-day effective date. If you do not want a batch or file that has missed the same-day deadline to be processed with a next-day effective date, you must complete an ACH adjustment request to delete it. Once the adjustment is complete, you can use an alternate payment method. If you send a Same Day ACH credit, effective March 16, 2018, the receiving bank is required to make funds available by 5 p.m. local time. Prior to this, receiving banks were only required to post at the end of the processing day, which could be late at night. The sender's U.S. Bank settlement account will be debited intraday (when credits are originated) or credited intraday (when debits are originated) for Same Day ACH payments as they are processed through our ACH system. If you accidentally debit a receiver early, it can create a significant ripple effect for both you and the receiver. A debit submitted early is considered unauthorized and will result in return fees for the originator. Additionally, the receiver may not have sufficient funds in their account to cover the debit, which may result in one or more returns due to insufficient funds. In this case, the receiver could reasonably request that the originator credit them for the resulting fees or charges. Page 4 of 8

5 Transaction timing Q: If I send the ACH file of payments on Friday night, will it be made available on Saturday? Or on Monday, like it is now. If you send a file of payments on Friday night (after the sameday cutoff), same-day processing will not be possible and receivers will not be credited that day. Note: This assumes the receiving bank operates on a business day schedule; there are some banks that, in this scenario, opt to make the funds available to their customers on a Saturday instead of making them wait until Monday or the next valid business day. Once you have opted in to Same Day ACH, the handling of transmissions sent after deadlines will vary based on which deadline(s) you have missed at the time your file is received. If you submit via SinglePoint, it will check to ensure that Same Day ACH transactions are submitted before the Same Day ACH deadline on the initiation date. Only when you send Same Day ACH payments on Friday before the same-day cutoff is the receiving bank required to meet the expedited funds availability requirement associated with same-day credits (effective March 16, 2018). Q: We currently use two-day ACH for payroll direct deposit. Should we consider changing to Same Day ACH for all our payroll direct deposits? Effective March 16, 2018, receiving banks are required to make Same Day ACH credits available by 5 p.m. local time, instead of at the end of the day. So, if your employees expect funds early in the day, you may wish to continue sending payroll in advance and use Same Day ACH for emergency situations. Reporting changes Q: How will reporting of Same Day ACH items change? Q: We currently utilize the SinglePoint Current Day report called "ACH Summary and Detail" to identify all received ACH transactions on a daily basis. We run this report once, each morning at around 9 a.m. Will we have to run this report more often to capture all ACH activity? Prior to Same Day ACH, there were two current day data feeds to SinglePoint Current Day reporting: at 7 a.m. and 10 a.m. CT. Two feeds have been added so that Same Day ACH transactions are reported by 2 p.m. and 5 p.m. CT. Additionally, the Same Day ACH Status report available on SinglePoint provides the status of originated Same Day ACH transactions. Yes, there are updates to the ACH Summary and Detail report during the day so you will want to run it again. The ACH Summary and Detail report is a filtered version of the comprehensive information found in the Current Day Summary and Detail reporting. The additional 2 p.m. and 5 p.m. CT data feeds to Current Day reporting are also reflected in the ACH Summary and Detail report. Page 5 of 8

6 Reporting changes Q: Are there any reporting changes that will impact my BAI formatted files? Yes. For Same Day ACH received transactions, an 88 record label was added to the 16 transaction record in September The label appears after the existing standard transaction detail and before any ACH addenda if you have the addenda option enabled on your account. Additionally, two characters "SD" appear at the end of the bank reference field in positions 19 and 20. The following example shows changes highlighted in blue: 16,169,amount,,bank ref0n00sd,cust ref 88,PAYMENTS CMPID ABCDE CCDCompany XYZ 88,SAME DAY ACH 88,ACH Addenda string of raw data, multiple records Q: We receive bank files into our SAP system, so to be able to see the true cash position, do we need to get an updated report in the afternoon? Q: Is it at my discretion to reject same-day debits that negatively affect my cash position? You can get file feeds at 2 p.m. and 5 p.m. CT to update your system and cash position. Based on the ACH rules, a debit can be returned if it is posted to the receiver s account before the due date agreed upon between the originator and receiver. Additionally, any debit transaction that is not authorized by your company should be returned. Communication with your trading partners and customers is key, whether you are originating or receiving Same Day ACH debits. Transaction charges Q: What is the cost for Same Day ACH? ACH remains a low-cost electronic payment option, but there are additional Same Day ACH transaction fees. Please contact your U.S. Bank Relationship Manager or Treasury Management representative for Same Day ACH pricing information. Q: Is there a charge to accept a Same Day ACH? Q: How does the cost of Same Day ACH compare to a wire? At this time U.S. Bank is not assessing any additional fees to receive same-day transactions. Same Day ACH costs less than a wire. Making corrections Q: Mechanically, if a Same Day ACH transaction is initiated, can it still be recalled if we discover an error? How much time would we have to correct the error? You still have up to five days past the settlement date to reverse a same-day transaction. However, with credits, you'd really want to act quickly to be sure that the receiver has not withdrawn the funds. Page 6 of 8

7 Making corrections Q: Can a recall or return be executed as same-day even though the transaction originated as next-day settlement? Yes, you can initiate a recall in the same day, but it has to be done according to the new same-day deadlines. The ACH Direct File Transmission deadline is Noon CT. The SinglePoint ACH Origination deadline is 11:15 a.m. CT. The deadline for non-nacha formatted files and Consolidated Payables is 10:45 a.m. CT. Using Same Day ACH Q: Are the prenote rules changing for sameday transactions? Q: Do I need to make changes to my ACH blocks to allow for Same Day ACH? Q: What is the difference between a wire payment and Same Day ACH? Q: How can I get more information for my technology staff? Q: What about ACH Positive Pay? How often will I need to check this? Q: Will UPIC be supported via Same Day ACH processing? The prenote rules are the same. Receiving banks now have the opportunity to respond to prenotes sooner, but they are not required to do so. No. ACH blocks work the same for same-day as they do for next-day transactions. Wire transfers are irrevocable, processed individually, and the recipient receives the money quickly. Same Day ACH transactions are batch payments, processed several times a day, limited in dollar amount, can be reversed, and, effective March 16, 2018 are required to be made available by 5 p.m. local time. The requirement in previous phases of Same Day ACH was to post by end of the business day. You can find additional information on the website at: (use access code fastach16). In addition, the U.S. Bank Direct File Transmission ACH user guide and SinglePoint online help include information on Same Day ACH. With the new transaction receipt times associated with Same Day ACH, you may need to check for ACH Positive Pay exceptions at additional times during the day. To be most efficient, we recommend that you make use of the SinglePoint LaunchPoint notifications and/or External Messaging to receive an alert when new exceptions need review. Yes, Same Day ACH supports UPIC. Note: A UPIC is a unique account identifier that enables an organization to publish electronic (ACH) payment instructions to customers without exposing confidential banking information. Future Same Day ACH changes Q: When can I initiate Same Day ACH debits? Same-day debit origination became available on Sept. 15, If you choose to add Same Day ACH to your current service, you will be able to originate both credits and debits. Q: Will the IRS originate Same Day ACH debits after Sept. 15, 2017? If so, this could be a bank account funding challenge. The IRS has not shared specific plans for supporting Same Day ACH debits. Page 7 of 8

8 E-Payment Service is the U.S. Bank consumer-to-business and business-to-business payment solution, allowing businesses and organizations to receive payments electronically via online, phone and in-person payment channels. A Same Day ACH processing option is being considered as a future enhancement. Please check back for more details. Q: Will Same Day ACH be available for lockbox ARC transactions? Consumer checks sent to a lockbox can be cleared as ACH account receivable entries (ARC). Due to the low average dollar value and the expense to process this premium service, same-day ACH processing may not be economical. At this time, Same Day ACH will not be developed for U.S. Bank lockbox ARC clients, we are monitoring the opportunity to provide this service. If you operate an in-house lockbox and wish to speed up your collections, please contact your relationship manager or Treasury Management Consultant to discuss your specific needs. Helpful information from NACHA Here are some useful links for accessing information from NACHA. The NACHA website has helpful technical details and a number of frequently asked questions and responses. The NACHA Rule Book includes the detailed rule changes on Same Day ACH. You can order a copy of the rules from NACHA. You can request free online access to the basic ACH Rules Online at this site. Same Day ACH rules information for each phase of Same Day ACH is also available on the NACHA website in the Same Day ACH section. This NACHA website helps you keep aware of current and emerging fraud threats Future Same Day ACH changes Q: Will I be able to receive payments originated through E-Payment Service sameday? U.S. Bank and SinglePoint are registered trademarks of U.S. Bank National Association. Products and services offered may be subject to credit approval. Eligibility requirements, other conditions, and fees may apply. Deposit products offered by U.S. Bank National Association. Member FDIC U.S. Bank. (3/18) Page 8 of 8