Effective March 20, 2020, the Same Day ACH (automated clearing house) per-transaction dollar limit will increase from $25,000 to $100,000.
This new threshold will help corporate users improve their cash flow, offering alternative options for cash concentration as well as disbursement by giving users the ability to pay larger amounts, such as payments for federal taxes. While this update is supposed to address users’ main pain points, the low dollar amount may still not be enough for all of corporates’ end-users.
While the ACH system remained mostly unchanged for decades, in 2016, NACHA (National Automated Clearing House Association) deployed its faster payment plan with the launch of Same Day ACH payments. Since the release of Same Day ACH for credit and debit payments, improvements have been made to speed up these payments.
Last year, NACHA announced that 1.1 million Same Day ACH payments were made daily in September 2019, a 54% jump from the previous year. This trend is expected to continue with the application of the last two steps of the Moving Payments Faster plan, which should promote the extension and growth of the ACH network.
Rule 1: Providing faster funds availability
The first rule, rolled out in 2018, increased the speed of funds availability.
Rule 2: Increasing limit threshold
As previously mentioned, the second rule, which will go into effect March 20, 2020, will increase the Same Day ACH per-transaction dollar limit to $100,000. Currently, the per-transaction dollar limit is $25,000.
Rule 3: Expanding access to Same Day ACH with a new processing window
The third and final rule, which is expected to take effect March 19, 2021, will expand the settlement window for same-day ACH transactions. Currently, ACH payments are processed in four settlement windows each day; two out of the four settlement windows include Same Day ACH, which are required to be cleared that day. The second clearing of Same Day ACH payments is processed during the third settlement window, meaning that the latest time a Same Day ACH can be submitted will be 4:45 p.m. ET, rather than the current 2:45 p.m. ET cutoff.
This additional window will give East and West Coast banks more opportunities to settle payments within a day. However, smaller banks may have difficulty running a third batch of transactions for same-day settlement. While international ACH transactions cannot be processed in this new window, all returns and notifications of change will be eligible for processing, giving corporates more flexibility.
If you have any questions about these changes, please contact your Redbridge advisor. As always, we are here to assist with navigating this payment landscape.