On September 23rd, 2016, a new and important Automated Clearing House rule goes into effect -- one that allows users of the ACH network to opt-into the same day processing of payments that might have otherwise taken two to four days to settle. According to NACHA (the Electronic Payments Association; the administrator of ACH), "There are many uses of ACH payments for which businesses and consumers could benefit from same-day processing. This NACHA rule change will enable ACH Originators that desire same-day processing the option to send same-day ACH transactions to accounts at any receiving financial institution."
This rule change is no small deal given the number of transactions and dollars that move across the Automated Clearing House (ACH) on any given day. Direct deposits, wire transfers, automated bill-pay programs and many other forms of electronic funds transfer all rely on the the ACH to securely and accurately move money between parties. But now, with the new rule in place, the various payment API providers that support ACH payments have to update their systems so that their clients can not only opt-in to same-day ACH (SDA) for some or all payments, but also so that the appropriate fee structure is put into place. According to the aforementioned NACHA brief, "The [new] rule includes a “Same Day Fee” on each Same Day ACH transaction so that [receiving financial institutions] would recover, on average, their costs for enabling and supporting Same Day ACH."
Just in time for the new rule going into place, one payments API provider that specializes in ACH payments - Dwolla -- is announcing that their existing API for white label customers is being expanded to accomodate same-day ACH. According to a blog post by Dwolla director of communications Jordan Lampe, "The pilot program will offer platforms advanced access to Same Day ACH, allowing members to initiate credit transfers via our White Label API and providing faster funds availability to their users. No plastic cards required."
Expanding on the announcement, Lampe told ProgrammableWeb that the idea behind the pilot is get feedback before the API is made official. According to Lampe, the existing API is being expanded with a flag that indicates that a transaction should be completed that day so long as all other requirements for an SDA are met. "If a Platform sent a payment over the per transaction limit or, say, outside the the Same Day ACH window timeframe" said Lampe, "the transfer would either fail or defer to Next Day ACH." Lampe went on to say that Dwolla would likely charge extra for SDA transfers but that the company, based on feedback from customers, is still trying to determine what the best business model is. Lampe said "Dwolla's SDA functionality will be an opt-in program, with additional costs (still cheaper than cards). White Label partners wouldn't get it by default. It's a value-added service. This additional cost may be a per transaction cost or part of a monthly subscription, likely depending on the preference and use case of our partner. We're still working on this model with partners."
Though subtle, Lampe's comment about the costs for SDA transfers being favorable when compared to credit cards should not go with out notice. The ACH network essentially cuts out the middlemen -- the credit card companies -- that are involved in so many billions of transactions. But the slower speed of the ACH network when compared to the credit card approach justified the use of credit cards. Now, with a same day option that doesn't involve a financial institution as a middleman, the per-transaction overhead is substantially reduced to a cost that's well-below that of a credit card transaction. The move towards same day ACH might not only put a bit of a hurting on the credit card industry, it could also slow the uptake of another financial technology that eliminates the middleman; Bitcoin.
In addition to expanding the API Request format to allow for an SDA "flag," Lampe told ProgrammableWeb that Dwolla's Webhooks API for keeping tabs on transaction outcomes will now also report on the success or failure of a same-day request.