What you Need to Know About Same Day ACH to be Successful

Have you ever heard from a bank or credit card processor that Same Day ACH will not make a difference?

If you’re involved in pushing payments to cards or bank accounts, especially in the gig economy, you know that real-time payments and Same Day ACH can be game-changers. So why do some banks and financial services stakeholders downplay its value? While there are marketing perks for using these payment options, the real advantage lies in the recovery of owed funds. 

It’s not entirely wrong to say that “Same Day ACH may not make a difference,” especially if you’re seeing a high success rate in collections. But this perspective misses a key point. Delaying funds has its financial upsides, like maximizing fees or leveraging overnight investments. However, in today’s customer-driven market, where low costs of funds are more common, this outdated approach is becoming less relevant. Same Day ACH benefits lenders as much as other users by speeding up access to funds. To fully understand what’s at work, it is important not to confuse the ‘behind the scenes’ settlement process that happens with Receiving Depository Financial Institutions (RDFI) and Originating Depository Financial Institutions (ODFI) for the settlement process that happens in your bank account and your customer’s bank account. 

Cutting Through the Complexity

Automation is not enough to adapt to the changes in the digital landscape. Businesses still playing catch up to the digital shift are losing revenue rapidly due to manual processes. ValidiFI’s independent survey of current customers revealed that a financial service provider can incur an additional 3.8 hours of personnel hours per loan, to manually collect on existing customers. Not only does this cost financial service providers soft money, but it also costs hard money in the sense that these employees could instead acquire and originate new customers, inform current customers about new products, or answer customer service questions.  The PRO platform addresses the issues tied to operating expenses and the soft costs that businesses incur by removing manual processes for least cost routing and selective cost routing, using AI and ML to solve these business challenges. 

Automation alone isn’t enough to keep pace with the evolving digital landscape. Businesses that lag behind the shift to digital are losing revenue by sticking with manual processes. This doesn’t just cost businesses soft money—it means they’re missing out on new opportunities. Employees who could be acquiring new customers or providing support are instead stuck in manual collection efforts.

That’s where ValidiFI comes in, eliminating manual processes and leveraging bank account intelligence for real-time bank account validation. 

NACHA’s Role in Same Day ACH

Under NACHA guidelines, Receiving Depository Financial Institutions (RDFIs) are required to settle Same Day ACH transactions within two hours of the cut-off windows, with the option to settle by 5 PM the same day. This means that if you initiate a Same Day ACH transaction, your bank (the Originating Depository Financial Institution, or ODFI) is required to settle the funds into the consumer’s account within two hours—or by no later than 5 PM.

Behind the scenes, NACHA requires two things for Same Day ACH transactions:

1. Your bank sends the payment request to the customer’s bank within two hours.
2. The customer’s bank settles the debit or credit transaction the same day.

This ensures that the transaction doesn’t appear as “pending” but is fully settled as a debit transaction in the customer’s bank ledger that day. 

Same Day ACH and NSFs 

Can Same Day ACH transactions be returned for non-sufficient funds (NSF)? Yes, but with Same Day ACH, the customer’s bank must settle the funds on the same day, whereas with Standard ACH, banks can settle funds over the course of several days. With Standard ACH, a debit transaction can remain in limbo, subject to the customer’s bank’s policies on risk management and contractual obligations.

When it comes to clearing of funds, NACHA doesn’t control each bank’s clearing policies. Clearing is generally governed by each bank’s internal policies, which can vary significantly. In theory, a customer’s bank could settle the funds on the same day and then reverse the transaction days later due to an NSF. However, reversals are less likely with Same Day ACH because customer banks typically ensure sufficient funds before completing the transaction.

Same Day ACH pushes financial institutions—especially large ones—toward faster settlements, which is increasingly important given the competition from alternative clearinghouses, FedNow’s fast payments initiatives, and fintech companies that are rapidly transforming real-time payments.

Does It Work 100% of the Time? 

Is there a 100% guarantee that Same Day ACH will settle the same day? Statistically, yes. Will it clear the same day? Also, yes. But does this mean a transaction will never be returned for an NSF? Unfortunately, no.

Same Day ACH provides confidence that a transaction will clear and settle as expected. For finance and treasury teams, this is a major advantage in managing liquidity and minimizing disruptions. Paired with technologies like ValidiFI’s Bank Account Validation solutions, you can verify account balances before initiating transactions, reducing the likelihood of NSFs and returns.

Potential Exceptions

While Same Day ACH is highly reliable, there are some exceptions:

• Correspondent Banks: Banks, particularly credit unions, may rely on correspondent banks to process their ACH transactions. This introduces a third party, which can increase the chance of delays or errors due to communication or timing issues.

• Pending Transactions: If a customer makes additional purchases after their account is verified but before the debit is processed, funds may no longer be available. For example, if we verify $100 of funds are available at 10 AM and the balance in the account is $105, but the consumer buys $10 of donuts at 10:05 AM, now the funds available are $95. As a result, the $100 debit you submitted will be returned.  However, solutions like ValidiFI’s Bank Account Validation solutions utilize proprietary database of bank account and payment intelligence to help reduce these risks.

• RDFI Ledger Policies: Some banks still use outdated systems, like outdated balance calculation rules that may delay or incorrectly prioritize transactions, potentially leading to NSF charges or reversals. There have been legal cases involving banks found to have processed and cleared debit transactions in a way that prioritized their own profits, leading to the maximization of NSF fees for customers.

Why Same Day ACH? 

No system can completely eliminate ACH returns—at least, not until banking systems and technologies synchronize information in a real-time format. In the meantime, third-party providers like ValidiFI are crucial for finance and treasury teams, offering predictive technology, intelligent scoring, and real-time validation to bring greater certainty and reliability to the payment process. NACHA’s guidelines, when combined with these technologies, provide a strong foundation for faster, more secure transactions.

Additional Resources 

Here are additional links to resources that may be helpful to further understand the benefits of using Same Day ACH: 

• NACHA video: https://www.youtube.com/watch?v=evH4b5ibxns 
• NACHA explanation of Same Day ACH: https://www.nacha.org/resources/same-day-ach-moving-payments-faster 

Contact ValidiFI today to learn more and to find out how our bank account validation solutions can help.