Home Refractory Nacha learns that bigger is better for same-day ACH payments | source of payment

Nacha learns that bigger is better for same-day ACH payments | source of payment


Raising the cap for faster payments was like breaking a dam for Yasser Abou-Nasr, who sees an opportunity for Dwolla, his payments company, to enter an entirely new category of digital transactions.

“It gives us a larger addressable market with new businesses and new industries for faster payments,” said Abou-Nasr, senior vice president of product at Dwolla, which provides API connections to the ACH network and RTP Instant Settlement Rail.

Nacha, who oversees the ACH track, increased the transaction limit from $100,000 in March to $1 million on the same day, after raising the original limit of $25,000 in March 2020.

The reaction to the latest increase was immediate. In March 2022, same-day ACH volume totaled $115 billion, a 42% increase from February, when volume was $81 billion. In April, same-day ACH volume was $177 billion, up 54% from March. Average volume per same-day payment increased from $1,681 to $2,827, just above the average of $2,679 for a standard ACH transaction, which has a one-cent limit under $100,000,000 per transaction.

“The expectation was that this increase would create some use cases and improve some other use cases for ACH on the same day, and that’s what happened,” said Michael Herd, senior vice president of ACH network management at Nacha.

The boost is primarily coming from business-to-business transactions, which tend to be larger than consumer payments and also address the need to improve supply chain financing, Herd says.

“For example, you have a case where payment is due upon delivery of a product, and that’s where the same-day tag helps,” Herd said. Payroll and insurance payouts are examples of how the higher limits can support transactions involving consumers, he said.

Dwolla’s Abou-Nasr says the higher same-day ACH limits allow his company to pursue new business categories.


Same-day ACH is one of several options to speed up the processing of transactions. The Clearing House RTP track offers instant settlement and is building bank support, while the government-based FedNow track is under development. ACH the same day is fast becoming an election that is not instantaneous but is still relatively quick at less than 24 hours.

“ACH is really hot right now, we’re seeing it growing on a hockey stick curve,” Abou-Nasr said.

With the higher same-day ACH limit, Dwolla plans to target insurance technology companies, construction companies, supply chain and logistics companies. Those businesses may not need instant payment processing through the RTP rail, but could benefit from the slightly “less speedy” same-day ACH, Abou-Nasr said.

Dwolla, which has its roots in supporting a mobile wallet for digital payments, has become more aggressive enables faster payments over the last year. Dwolla founded 2021 a Partnership with Cross River Bank in New Jersey to connect to The Clearing House’s RTP rail to support real-time payments for business customers.

But the instant rail has not yet reached the entire market. More than 200 banks use the RTP rail, which launched more than five years ago and covers about 70% of US checking accounts. But to date, the overall adoption of RTP by banks has been gradual, with banks often citing challenges when adopting other payment innovations such as B. Buy It Now/Pay Later as a reason to move slower on RTP.

Real-time billing or Request for Pay (RfP) uses the RTP rail to support bill payment in near real-time or at a specifically scheduled time. This category has attracted big banks like Citigroup, Bank of New York Mellon, JPMorgan Chase and PNC Financial Services Group. But dozens of large banks and thousands of smaller financial institutions offer neither RTP nor RfP. As the economy slows, banks expect acceptance will increase to mitigate overdrafts. And the state-sponsored rail FedNow will not be active until 2023 at the earliest.

In a previous interview Attie Muse, Verizon’s director of payment strategy and operations, which is participating in real-time settlement trials with multiple banks, said bank ubiquity is necessary for real-time payments to become mainstream. Muse also said instant settlement likely won’t be required for all payment types or in all cases.

Dwolla’s Abou-Nasr said that while the preference is to move as much volume as possible to Instant Settlement Rails, same-day processing can serve a broad market as the ACH network already covers more than 10,000 financial institutions.

“Some are still reluctant to fully exceed the RTP. And there are other rails that are available for faster processing,” Abou-Nasr said. “While the pace of RTP adoption may be slow, there is also the ACH rail that is expanding use cases with the higher daily ACH limits. It helps to have parallel rails.”

While fees vary, same-day ACH costs about double that of a traditional ACH payment, but also about half that of an RTP transaction, Abou-Nasr said.

“It’s worth noting that even next-day standard ACH is still faster than a check, and standard ACH has grown almost 10% over the past year,” Herd said, adding that standard ACH payments are growing totaled $72.6 trillion in 2021.

According to Gregory MacSweeney, vice president and head of communications at The Clearing House, RTP and same-day ACH can coexist.

Same-day ACH can be the preferred payment method if the sender is already used to sending via ACH because they don’t have to change their process, MacSweeney said. But there are also reasons to prefer RTP, he said.

“The RTP network also offers additional features not available on same-day ACH, such as: “For example, instant payment confirmation—so the sender knows payment has been received—and services like RfP, which allows bills to be paid,” MacSweeney said.