SAME DAY ACH CLEARING & SETTLEMENT: THE REVOLUTION OF FASTER ACH PAYMENTS Panelists: Jared Ramsey, TD Bank Denise Grosso, TD Bank Laura Clary, Fiserv Moderator: Manny Evangelou, TD Bank
AGENDA • Evolution of Same‐Day ACH – Past, Present & Future
• Use Cases of Same‐Day ACH – "Emergency Payroll" – "Cash Crunch"
• Strategic Thinking – Customer Centric Approach – Business/Technology/Vendor Approach
• Ongoing Considerations • Future in Motion • References & Links • Q & A 2
Evolution of Same‐Day ACH Where we are:
NACHA's Phased Approach
• NACHA's Same‐Day ACH Phased Proposal • Federal Reserve's Pursuit of a Better Payment System
Phase II Phase I 2016 September
2013…2015
2017 September
Phase III 2018 March 2018
2017
2016
...2010
Where we were: • Typical Operator Next Day Settlement for Current Effective Dated Entries
• FED ACH Same‐Day Service (Opt‐in)
• Perceived Same‐Day Settlement for On‐Us / • Direct Exchange By‐Us Originated Items
Use Case "Emergency Payroll" Same‐Day ACH Credits Settlement Originator Never Late, Inc.
Originator
Normally submits Friday's Payroll Thursday afternoon
Receiver Joe PayMe Works for Never Late, Inc. and Relies on Paycheck for Month‐to‐Month Bills
Receiver
ACH Network
ODFI
O.D.F.I. Dodd Frank, N.A. R.D.F.I. CFPB, N.A.
RDFI Memo‐Posts credits on Collection Intra‐Day (NACHA Phase I , II – by EOD, Phase III – by 5 p.m. RDFI Local Time)
Distributes ACH entries multiple times per Day (Same‐Day ACH Windows: 10 a.m. and 3 p.m. EST)
Use Case "Cash Crunch" Same‐Day ACH Debits Settlement PaymeNow, Inc.
Dodd Frank, N.A.
• Originates ACH Debits as Rendered Payments to cover Consumers Utility Usage
• Strategically distributes ACH entries multiple times per Day
Originator
ODFI
Receiver
RDFI
Bill MeNow, Inc.
CFPB, N.A.
• Makes timely payment arrangements with PaymeNow, Inc. to debit his account on July 17th.
• Strategically Memo‐Posts debits on Collection Intra‐Day
Strategic Thinking Customer Centric Approach Same‐Day ACH ACH Network
Customers Operations
Technology
Strategic Thinking Operations/Technology/Vendor Approach
Customer Awareness • Education, Managed Expectations, Delivery, Service
Funds Availability • Debits, Weekends, Frequency, Timing
System Logistics • Enhancements, Costs, Timelines, Impact, Constraints 7
Ongoing Considerations • Regulatory • Compliance, Time Order Posting, Reg E, NACHA Rules
• ACH EDI & Returns Reporting Obligation • Operational Processing • Reconciliation • Billing, Expectations, Reporting
• NACHA Phased Approach • Phase 4?
Future in Motion The Geography of Faster Payment Channels United States: o NACHA Proposal for Same Day ACH (Phases I,II, III) o Federal Reserve Pursuit of a Better Payment System Payment System Improvement – Public Consultation Paper (Sept. 2013) o The Clearing House Initiative for Secure Real‐Time Payment System
Other Countries: o UK Faster Payments Service (FPS) o Australian Real Time Payments o Singapore G3 Immediate Payment System
Consider this… If the ACH Network does not capitalize, who will?
References & Links https://www.nacha.org/content/same‐day‐ach https://fedpaymentsimprovement.org/ https://www.theclearinghouse.org/press‐room/in‐the‐ news/2014/10/20141022‐tch‐to‐develop‐real‐time‐ payments‐system http://www.fasterpayments.org.uk/ http://www.apca.com.au/about‐payments/future‐of‐ payments/real‐time‐payments http://www.euromoney.com/Article/3303735/Singapore‐ closes‐in‐on‐real‐time‐payments‐as‐Australia‐prepares‐for‐ mandate.html
Q & A
Thank You!! Jared Ramsey, AAP
Denise Grosso, AAP
Laura Clary, AAP
VP, Operations Manager US Payments Services Division TD Bank
[email protected]
VP, Sr. Lead Business Systems Analyst US Technology Solutions TD Bank
[email protected]
Director, Product Management Payments Group Fiserv
[email protected]
Judith Dunn, AAP
Emanuel "Manny" Evangelou
VP, Projects Specialist Manager US Payments Services Division TD Bank
[email protected]
VP, Sr. Business Systems Analyst US Technology Solutions TD Bank
[email protected]
