Digital developments in the financial world are changing the way consumers and financial institutions engage with each other. For Originators and Third-Party Service Providers, 2016 amendments to NACHA Rules will create fees for unauthorized returns, and require additional disclosures to the consumer about the distinctions between debit and ACH cards at POS. At the same time, same-day transaction settlements will dramatically increase the speed at which almost all digital transactions occur.
Financial incentive to reduce unauthorized debit returns
On October 3, 2016, ODFIs will be assessed a fee to pay to RDFIs for unauthorized returns coded R05, R07, R10, R29, and R51. RDFIs’ settlement accounts will see the credits for those fees.
POS ACH card clarifications
In 2010, the Federal Reserve clarified that its “Overdraft Opt-in” rule covered only ATM and one-time debit transactions made with a debit card issued by the account-holding institution. Since then, consumer confusion occurred when overdrafting transactions made with ACH cards issued by Third-Party Service Providers were not covered by that rule. As of March 18, 2016, NACHA Rules Article Two, Subsection 2.5.11.2 requires third-party service providers to disclose terms related to overdraft charges, protections, and other benefits associated with their cards.
Same-day settlements for credit entries begin on September 23, 2016
With the implementation of NACHA’s new “Same Day ACH Rule,” digital financial transactions will move almost as fast as cash transactions. According to the Federal Reserve, the option to settle financial transactions on the same day that they are originated will improve the ability of the ACH Network to facilitate time-sensitive payments, and provide swifter funds availability for payment receivers.
New rule adds RDFI obligation and cost recovery
The new rule allows any ACH Originator the option of offering financial products that can settle on the day of origination. To accommodate the expected rise in same-day transactions, RDFIs will be required to process those transactions, and each transaction will have a corresponding “Same Day Fee” to cover additional RDFI costs and expenses. The rule requires RDFIs to enable same-day processing by the rule implementation date of September 23, 2016.
To cover what is anticipated to be a boom in same-day activities, same-day transactions will have the opportunity to access two new clearing windows:
* The morning submissions must be received by 10:30am ET to have settlement occur at 1:00pm ET.
* The afternoon submissions must be received by 2:45pm ET in order to settle at 5:00pm.
Only international (IATs) and high value (>$25,000) are ineligible for same-day availability, although eligible transfers account for 99 percent of all ACH activity today.
Three phases of implemenation
Beginning September 23, 2016, Phase One launches with only ACH credits processed in the same-day system. These will include expedited bill payments, payroll, and person-to-person actions. Phase Two begins on September 15, 2017, when ACH debits move to same-day status. These are payments involving consumer bills. Finally, on March 16, 2018, Phase Three requires RDFIs to provide same-day funds availability to their receivers. For ACH Network participants, NACHA has produced checklists to ensure complete and full operational ability on Same-Day Opening Day.
NACHA’s revised Rules contain the full statement of the intricate details regarding batch descriptions, same-day fees, and standards for reversing entries under the new systems. As with other ACH Network activities, NACHA’s Rules Enforcement Panel will be the dispute-resolution authority for same-day transaction issues.
Faster transaction settlement times and swifter access to funds are expected to transform both the digital financial and commercial worlds. Same-day e-commerce payments could result in faster shipment of goods to consumers, and more available capital for merchants to create and produce inventory. Avoiding non-sufficient funds returns will save money for both the financial institution and its customers, and any person who relies on automated payroll systems will have faster access to regular paychecks, as well as bonuses or advances.
