Here we are, just a few short weeks from the implementation of Same Day ACH debits. Yikes! Much work was done in preparation for the implementation of Same Day ACH credits, and it’s clear those preparations paid off because September 23, 2016 was like any other day in the ACH Network – UNEVENTFUL! And it’s my hope September 15, 2017 will also be “just another day.”
While I’m confident financial institutions have been hard at work on their Phase 2 implementation plan, I thought I’d take one final opportunity to review some of the top considerations that should be on an institution’s checklist.
- Ensure staff have been educated on Same Day ACH, whether that be in support of the receipt of Same Day debits (address concerns and questions about account being debited so quickly) or in support of clients originating Same Day debits (proper use of Effective Entry Date).
- Don’t forget about the impact Same Day debits could have on your institution’s settlement account. At this point, you should be used to receiving settlement for ACH three times a day (8:30 AM ET, 1 PM ET and 5 PM ET). RDFIs will need to address the impact of debits as they could potentially find themselves in an overdraft situation. And for ODFIs, the impact of originating a same-day debit could result in an ODFI having additional funds to invest.
- Review and update ACH policies and procedures, as necessary.
- Ensure your vendors/processors are ready to support receiving debits, including testing.
We may see an increase in Same Day ACH activity beginning with Phase 2 since debits represent approximately 60% of all ACH transactions in the Network. Because RDFIs must accept all payments that come their way and there are typically more exceptions related to debits, they must be ready to go September 15. RDFIs will want to ensure debits are not posted prior to the Settlement Date and be aware that their posting order could have an impact on account holders. For example, if items are posted as they come in, they could see an increase in NSF returns as Same Day ACH debits will process throughout the day – consumer daylight overdrafts after each settlement.
Proper use of the Effective Entry Date will continue to be just as important with Same Day debits. ODFIs are encouraged to perform some analysis of current debit files and “check and correct” the Effective Entry Date, as appropriate. The potential impact of a “bad” Effective Entry Date is an unintended Same Day payment. For credits, this meant Receivers got funds before they expected; and for Originators, their account was debited earlier than anticipated causing them a potential cash management issue. But the impact to the Receiver and Originator are a little different with debits. For example, debits settling prior to the date the Receiver authorized could result in an increased number of NSF returns since the Receiver was not expecting the payment until the next day. But they could also result in more debits being disputed as unauthorized.
Again, I know you’ve been working diligently on preparing for Same Day ACH debits, but with only a few short weeks to go, please take the time to double check your readiness. After all, even Santa checks his list twice!