Same-Day ACH A New Rule; A New World. August 21, 2015 Puerto Rico Same Day ACH Symposium

Transcription

1 Same-Day ACH A New Rule; A New World August 21, 2015 Puerto Rico Same Day ACH Symposium

2 DISCLAIMER The information contained herein has been prepared for general informational purposes only and is not offered as and does not constitute legal advice or legal opinions. You should not act or rely on any information contained herein without first seeking the advice of your legal counsel. 2

3 Improving Network Speed 3

4 NACHA s Same Day ACH Initiative The industry has been interested in improving the way ACH processes and settles for a number of years Batch Processing Next Day Settlement Not on pace with other payment innovations/treasury practices NACHA proposed a model for speeding up ACH in 2012 Expedited Processing and Settlement (EPS) Did not guarantee funds expedited availability Was not supported by a sufficient business case NACHA engaged with industry over the next 3 years and developed a revised proposal to the industry Surveyed ODFIs and RDFIs to identify cost factors Interviewed stakeholders to better understand pain points Request for Comment published 12/14 4

5 The Rationale Same Day ACH meets the needs of end-users for use cases such as payroll, bill payment, business-to-business payments, and account-to-account transfers A Same Day fee paid from the ODFI to the RDFI would provide, on average, recovery of implementation and operating costs, plus a reasonable rate of return, for RDFIs to enable Same Day ACH Same Day ACH would be implemented in three phases, beginning with Same Day ACH credits in September 2016; Same Day ACH debits in September 2017; and faster funds availability in March 2018 These effective dates are contingent upon receiving a timely commitment from the Federal Reserve to support the rule Same Day ACH is an immediate action that financial institutions can take to modernize the payment system, with functionality that can be leveraged in the future for real-time payments 5

6 Supporting New Use Cases Same Day ACH addresses needs of end-users: Payroll products to better support hourly workers and other payroll needs Bill payments and invoices due on that day Billers and banks looking to better manage credit risk and returns Moving payment-related remittance information on the same day Same Day ACH settlement reduces credit risk between organizations by lessening the exposure among counter-parties at any given time 6

7 Supporting New Use Cases Same Day ACH is an immediate action that can be taken to modernize the payment system, while utilizing a balanced approach among originating and receiving financial institutions Creates a foundation on which financial institutions can build other services Demonstrates that financial institutions can move forward to advance the payment system Implementation of Same Day ACH would lead to changes within financial institutions that could also be utilized for real-time payments in the future: Intra-day posting and funds availability of credits to DDA systems Improved risk management before credits are sent 7

8 What is the Rule? The ACH Operators will offer two new same-day processing windows A morning window with a submission deadline of 10:30 AM ET, with settlement occurring at 1:00 PM ET An afternoon window with a submission deadline of 2:45 PM ET, with settlement occurring at 5:00 PM ET ODFIs will be able to submit files of same-day ACH payments through the two new clearing windows that can reach all RDFIs in the ACH Network All RDFIs will be mandated to receive Same Day ACH payments RDFIs will be required to make funds available from same-day ACH credits (such as payroll Direct Deposits) to depositors by 5:00 PM local time 8

9 Intra-Day Settlement Windows 9

10 EPN Proposed Operating Windows Morning Service 4:30 pm Next Day to 10:30 am ET Current Day (16:30 Next Day-10:30 am ET Current Day) Same-day settlement window for same-day eligible forward items and ALL eligible returns 10:30 am to 11:00 am ET (10:30-11:00) Exchange of all items between FRB and EPN 11:00 am to 12:00 pm ET (11:00 12:00) Output file delivery of all items during morning window plus advices 1 pm ET (13:00) Settlement for morning service Afternoon Service 10:30 am to 2:45 pm ET(10:30-14:45) Same-day settlement window for same-day eligible forward items and ALL eligible returns 2:45 pm to 3:15 pm ET (14:45-15:15) Exchange of all items between FRB and EPN 3:15 pm to 3:45 pm ET (15:15-15:45) Output file delivery of all items during afternoon window Late Afternoon Service 2:45 pm to 4:00 pm ET (14:45-16:00) Same-day settlement window for ALL eligible returns only 4:00 pm to 4:30 pm ET (16:00-16:30) Exchange of ALL items from EPN to FRB 4:00 pm to 4:30 pm ET (16:00 16:30) Output file delivery of ALL entries during late afternoon window plus advices 5:00 pm ET (17:00) Settlement for afternoon and late afternoon service 10

11 All Transactions Will Be Eligible Virtually all ACH transactions, including credits and debits, will be eligible for same-day processing Same-day ACH credits will support use cases such as payroll, business-to-business, bill payment, and person-to-person payments Same-day ACH debits will support use cases such as bill payment, account-to-account transfers, check conversion, business-to-business, and e-commerce payments Most non-monetary transactions will also be eligible for same-day processing Prenotifications Notification of Change Zero Dollar Entries remittance information transactions Death Notifications (DNEs) Only two categories of ACH transactions will be ineligible for same-day processing International transactions (IATs) Large-dollar transactions over $25,000 11

12 The Rule Will Be Phased In This will rule will be phased in over a 3 year period: First phase - Effective September 23, 2016 ACH credits will be eligible to be processed during the two new same-day processing windows All RDFIs will be mandated to receive same-day ACH transactions Settlement for same-day ACH credits would occur at 1:00 PM and 5:00 PM ET, respectively (for the two processing new windows) Second phase - Effective September 15, 2017 ACH debits will become eligible for same-day processing during the two new same-day processing windows Third phase Effective March 16, 2018 RDFIs will be mandated to make funds available from same-day ACH credits no later than 5:00 PM at the RDFI s local time 12

13 FRB Participation as Operator The Federal Reserve has not committed to supporting this rule as ACH Operator, which is critical to ubiquity The Federal Reserve Board s path to support the rule includes a 60-day public comment period, which closes July 2, 2015 If written confirmation is received by September 23, 2015, a full year prior to the effective date of Phase 1, then the Rule will become effective as planned If written confirmation is received between September 24, 2015 and November 13, 2015, then the three effective dates of the Rule will become effective 6 months later than the dates in the ballot, respectively, with Phase 1 beginning in March 2017 If written confirmation is received between November 14, 2015 and May 18, 2016, a full year after the ballot due date, then the three effective dates of the Rule will become effective 12 months later than the dates shown in the ballot, respectively, with Phase 1 beginning in September 2017 If written confirmation is not received by May 18, 2016, the Rule will NOT go into effect 13

14 The Same Day Entry Fee Initial Same Day Entry fee is set at 5.2 cents per same-day entry Under the new Rule: ODFI agrees to pay a Same Day Entry fee to the RDFI for each Same Day Entry originated by or through the ODFI NACHA will review effectiveness of the Same Day Entry fee Same Day Entry Fee could be maintained or lowered, not increased 14

15 Technical Highlights Identification of Same Day Transactions Same-day ACH transactions will be identified and processed by using the current day s date in the Effective Entry Date field of the batch of same-day ACH transactions An optional, standardized method is provided for ODFIs to use, at their discretion, with their Originators in addition to the Effective Entry Date Eligibility of zero-dollar ACH Transactions for Same-Day Processing Most zero-dollar transactions will be eligible for same-day processing beginning with Phase 1 of implementation Return Processing Any return entry will be eligible for settlement on a same-day basis RDFIs will not be required to send same-day returns 15

16 Stale or Invalid Effective Entry Date Transactions submitted to ACH Operator with stale or invalid Effective Entry Dates will be settled at earliest opportunity If transactions are submitted prior to the close of the second processing window (2:45 PM ET) Entries will be settled the same day and the Same Day Entry fee will apply If transactions are submitted after 2:45 PM ET Entries will be settled the next day and the Same Day Entry fee will not apply 16

17 Optional Same Day Indicator In the Company Descriptive Date field (Company/Batch Header Record, Field 8), an ODFI could require an Originator to use the convention SDHHMM as a same-day transaction indicator SD denotes the intent for same-day processing HHMM denotes the hour and minutes that correspond to the desired settlement timing of either 1:00 PM ET or 5:00 PM ET Valid content would be either SD1300 or SD

18 The Clearing House Payments Association, as a Direct Member of NACHA, is a specially recognized and licensed provider of ACH education, publications and support. Regional Payments Associations are directly engaged in the NACHA rulemaking process and the Accredited ACH Professional (AAP) program. The information provided in this webinar is for educational purposes only and is not legal advice. Thanks for your participation today! Rachel Pollard, AAP Training Specialist rachel.pollard@theclearinghouse.org 18