This April saw the most recent meeting of nationwide financial experts who are involved with NACHA, the Electronic Payments Association. NACHA is the leading enterprise in the design, development, and deployment of the standards behind ACH.
The big talk at this year’s conference had to do with ACH and speed.
As you already know if you use ACH for customer payments or payroll processing, ACH is not quite instant in the United States. In the majority of cases, ACH payments are captured for processing once a day.
This “speed limit” is not the result of individual processors’ actions, but instead has to do with the backbone activities behind ACH. ACH was originally developed in the 1970s, and much of its development since has focused on security rather than speed.
Of course, you only need to look at the sad case of Target Stores to realize that security has been the critical factor over the last few years. However, technology is now evolving to a point where both speed and security can easily co-exist.
In a survey of more than 200 financial executives, entrepreneurs, and other business leaders involved with ACH revealed that a vast majority of professionals expect “real time” ACH within five years.
In fact, a large number of them believe real time ACH is coming within two years.
Real Time ACH: How It Works And Who Will Benefit
There are few countries in the world that process ACH-like payments on a nearly real time basis. Some of the top contenders include Switzerland, a traditional hub of the financial industry and related activities, and Singapore. There are also a few others dotted around the globe.
There are a few major factors that determine the ACH speed limit:
-- Basic technical limitations on the speed infrastructure of internet services must be overcome. -- Processes at financial institutions need to be updated to manage multiple daily ACH payments. -- A defined need in the market must ensure that a big investment in ACH speed will pay off.
At the April NACHA meeting, the need for faster ACH was expressed in spades.
Now, National Processing is leading the way to introduce faster ACH to our customers as new standards are rolled out. Your customers will be able to make payments more conveniently, worry less about accidental overdraft issues, and pay for emergency expenses with ACH.
If you want to benefit from real time ACH, it’s a good idea to get started now. Contact National Processing as soon as you can to discover more.