The ACH same-day debit window opens Sept. 15, offering the chance for credit unions to promote speedier payments and overdraft protection.
Credit unions that do not process same day should work with processors and billers to avoid unauthorized early debits.
Rhonda Pavlicek doesn’t take anything for granted. Still, the senior vice president and CFO at TDECU ($3.1B, Lake Jackson, TX) says her credit union will be ready for the next phase of same-day payments on the country’s largest money rail.
Pavlicek is a board member for NACHA — The Electronics Payment Association and E-Pay Resources — and Friday, Sept. 15, is the day ACH debits become eligible for same-day settlement. It’s the second in a three-phase process that began on Sept. 23, 2016, with the addition of two windows to make ACH credit transaction settlements a thrice-daily affair.
Phase Three begins March 16, 2018, and will require financial institutions that accept those deposits to make funds available by 5 p.m. local time that day.
These changes speed up a payments network that NACHA says accounted for 25.6 billion transactions worth $43.7 trillion in 2016.
CU QUICK FACTS
HQ: Lake Jackson, TX
Data as of 06.30.17
12-MO SHARE GROWTH: 4.7%
12-MO LOAN GROWTH: 6.5%
NACHA lays out its recommended action items and use cases and benefits for same-day debit in an online ACH operations bulletin.
The emphasis of Phase Two is on proper authorization language and effective entry dates. Benefits include the ability for financial institutions to offer same-day movement of funds, which is a good way to compete with real-time disruptors. Billers and merchants, for their part, can offer nearly real-time bill pay on websites as well as accept and convert paper checks on the same day.
The first phase ― accepting deposits three times a day ― was “pretty uneventful,” Pavlicek says. It required some changes in back-office workflow but had little impact from a member perspective. But that doesn’t mean TDECU is banking on an easy Phase Two.
Rhonda Pavlicek, SVP/CFO, TDECU
“Just because the first phase was easy doesn’t mean we can take it for granted,” the CFO says.
The first of a three-phase implementation goes smoothly as the venerable ACH Network ramps up payments speed. Read more.
TDECU processes approximately $300 million in credits and $200 million in debits a month. On the back end, it is changing many of its processes, including posting share draft clearings throughout the day instead of just at the end of the day.
Faster clearing of all debits could catch members off guard, so the big Texas credit union is publicizing the change through social media, statement messaging, website FAQs, and more.
“We’re using this as an opportunity to promote other products and services, such as our line of credit loan and courtesy pay that give members additional overdraft protection,” Pavlicek says. “It’s about awareness. We’re going to be talking about movement of money and about how real-time balances will now be available for both debit and credit.