Same day ACH continues its steady, impressive growth

NACHA’s just-released data on Same-Day Payment volumes shows continued impressive growth for this new payments vehicle.

Through its first quarter of operation, nearly $17 billion of same-day transactions have been processed. Given the $5 billion NACHA previously reported for October- its first month live- this implies month-over-month growth in the 15-20% range. Not exactly a Pokemon Go level of runaway success but hey, we are still talking about ACH here. And I’ll be honest- it’s a far stronger start for Same-Day ACH than I had anticipated.

For those new to the story, in late September the ACH network established two new daily clearing windows, with settlement occurring at 1pm and 5pm Eastern Time. Once fully implemented NACHA estimates that same-day capability will be available for roughly 99% of transactions- the two exceptions being high-value payments (over $25,000) and international money movement.

To date more than half of same-day payments have been for direct deposit, the ACH network’s bread and butter. While “emergency payroll” may be a handy shorthand for this category, same-day capability also opens up use cases for hourly and casual employees whose time reporting deadlines didn’t mesh with the traditional direct deposit model.

Another one-third of same-day transactions, and over half of its overall dollar throughput, has been for B2B payments. It’s important to note that in each of the above examples, businesses are the payment originators. This should not come as a surprise- Phase One of the Same-Day ACH rollout enabled credit transactions, which better align with business needs. Once same-day debit capabilities are rolled out this coming September, consumer use cases will become more logical. If anything, I’m surprised P2P and consumer bill payments have generated as much activity (over 10% of the total) as they have under the current model.

The next steps in the Same-Day ACH growth curve are fairly clear. The ACH network wisely required all endpoints to accept same-day payments at launch; originating these payments, however, is entirely voluntary. Although NACHA hasn’t released stats in this area, it’s reasonable to assume that a disproportionate share of volume is being generated by a handful of FIs that have elected to promote the service- and have presumably built a revenue model for doing so.

An increasing number of FIs will need to jump on the bandwagon to keep the growth engine humming, at least until consumer volumes kick in this fall. Messaging for business customers is presumably more straightforward and efficient to execute- it might even serve as a test run for the consumer opportunity on the horizon- after all, this is a fee opportunity.

For now, Same-Day ACH continues to fly mostly below the radar. However, it’s already demonstrated enough potential to warrant more of FIs’ product planning bandwidth.