1. Same Day ACH; (And a Little on Faster Payments in General)
Fred Laing, II AAP, CCM, NCP
President and CEO
UMACHA

2. Agenda Same-Day ACH The Fed’s Faster Payments Task Force
What’s eligible
What differentiates a same-day entry from a next day-entry
How is same-day ACH being rolled out
Use cases
The challenges
The Fed’s Faster Payments Task Force
The process used – including it’s opportunities and challenges
Outcomes
The Governance Framework Formation Team
Where do we go from here?

3. UMACHA
Not-for Profit Association that supports Electronic Transactions – ACH, check/image, wire (with the exception of card)
Membership based with about 700 financial institutions and 35 processors and providers
Education is our focus along with Rules compliance for the financial market
Staff of 12 – covering MN, ND, SD, MT and parts of WI & MI

4. Same-day ACH

5. What’s Eligible for Same-Day ACH
Same Day ACH: What's New?
What’s Eligible for Same-Day ACH
Individual Entries of $25,000 and under
All Standard Entry Class (SEC) codes
Exception
International ACH Transactions (IATs)
Automated Enrollment Entries (ENRs)
Non-Monetary Entries
Prenotifications
NOCs
Returns
All Returns can be processed same day
Will not be charged the Same Day fee
RDFI would pay an origination fee for a return but there would not be a same day fee on top of the origination fee for a same day return.
© UMACHA 2017; All rights reserved.

6. Identifying Same-day Entries
Same Day ACH: What's New?
Identifying Same-day Entries
ACH Operator
Effective Entry Date field ONLY
All other ACH entries will run as before, next day or for certain credits, 2 days before settlement
ODFI and Originators
Effective Entry Date field
Stale dated and invalid values in this field will also qualify for Same Day processing
Optional
Company Descriptive Date
Company Discretionary Data
UGLY!
© UMACHA 2017; All rights reserved.

7. Identifying Same-day Entries
Same Day ACH: What's New?
Identifying Same-day Entries
Handling of Effective Entry Dates (EED)
Today’s date: Jan. 02, 2018
Batch EED:
Batch submitted by 10:30 AM ET
Batch settled 01/02/18, 1:00 PM ET Same-Day Entry Fee charged
Batch submitted by 2:45 PM ET
Batch settled 01/02/18, 5:00 PM ET Same-Day Entry Fee charged
Batch submitted after 2:45 PM ET
Batch settled 01/03/18, 8:30 AM ET No Same-Day Entry Fee charged
Talk to your Financial Institution about when they submit files to
the ACH Operator if you’re interested in Same-day ACH
© UMACHA 2017; All rights reserved.

8. Implementation Overview
Same Day ACH: What's New?
Implementation Overview
Functionality
Phase 1
Sept. 23, 2016
Phase 2
Sept. 15, 2017
Phase 3
March 16, 2018
Transaction Eligibility ($25,000 limit; IAT not eligible)
Credits only
Credits and debits
New Same Day ACH Processing Deadlines
10:30 AM ET and
2:45 PM ET
New Settlement Time(s)
1:00 PM ET and
5:00 PM ET
ACH Credit Funds Availability
End of RDFI’s processing day
5:00 PM RDFI local time
These times are for the ODFI, talk to your FI about their deadlines!
© UMACHA 2017; All rights reserved.

9. Phase 1 VERY smooth implementation
Used primarily for emergency payroll
Some usage for P-to-P and for B-to-B Just in Time payments
Volumes were relatively minimal
No one complains when they get their money early, debits are another matter

10. Phase 1 Same-day ACH Volume
By SEC Code

11. Phase 2 - Debits Same Day ACH: What's New?
© UMACHA 2017; All rights reserved.

12. Originating ACH in a Same-Day Environment
The Major Use Cases for Same-Day ACH are Projected to Generate 1.4 Billion Transactions
Over 60% of estimated Same-Day ACH volume comes from existing ACH
C2B
Bill Pay
eCommerce
POS check conversion
Merchant debit
Collections
C2C
Person-to-Person
Account-to-Account
B2B
Multiple uses, such as trading partner payments, due-date and late invoice payments
B2C
Payroll
Insurance, refunds
C2B = Consumer to Business
B2B = Business to Business
C2C = Consumer to Consumer
B2C = Business to Consumer
10 Primary Use Cases
63 Total Sub-Use Cases
© UMACHA 2016; All rights reserved.

13. The Big Challenge For Phase 2
Same Day ACH: What's New?
The Big Challenge For Phase 2
Have clear and readily understandable terms for your authorizations
ODFI warrants to each RDFI and ACH Operator that
Entry is properly authorized
For an amount that will be due and owing to the Originator from the Receiver on the Settlement Date
For a sum specified by the Receiver to be paid to the Originator
Unauthorized Debit Entry
Debit Entry was initiated for settlement earlier than authorized
BAD
© UMACHA 2017; All rights reserved.

14. Opportunities and Challenges
Same Day ACH: What's New?
Opportunities and Challenges
Opportunities
Ability to reach almost every FI with a same-day entry
JIT issues can be managed more effectively
Emergency payroll/missed payroll’s can be done
Returns will be faster, and in many cases same-day
Look for more Rule updates to same-day going forward
Challenges
It’s same-day, not real-time
Use of the Effective Entry date field can be an issue
Re-tooling of AP/AR to use same-day is a major job
The $25,000 limit
The additional cost, the Fed charges a fee to the ODFI to handle same-day entries
The cut-off times, especially the further west you go
© UMACHA 2017; All rights reserved.

15. News Flash!
NACHA distributed a Request for Comment in Mid-December dealing with updates to Same- day
Increase the $25,000 limit to $100,000
Add a later deadline, ODFI’s could submit files up to 5:15 PM E. T., RDFI’s would receive files by 6:00, Settlement would be at 6:30
Fed would need to update the NSS (National Settlement Service to enable this)
Require availability by 1:00 PM for ALL credit entries
RFI – concerning weekend and holiday processing

16. Faster Payments Task Force
Sponsored by the Federal Reserve

17. State of the Industry Faster Payment Task Force formed in early 2015
First meeting – June 2015
Over 300 organizations signed up!!
Step one – Develop effectiveness Criteria
Step two – Ask for potential solutions
Step three – rate those solutions against the effectiveness criteria (QIAT)
Step four – have the task force react to the ratings
Step five – Publish part one of the report from the Task Force
Step six – Review the primary hurdles to successful implementation of a faster payments solution
Step Seven – Publish a FINAL REPORT

18. Faster Payments Task Force Final Report Findings
Establish a Faster Payments Governance Framework
Recommend and establish Faster Payment Rules, standards and baseline requirements
Assess the payments regulatory framework and recommend changes
Establish an inclusive directory work group to identify and recommend a directory design
Enhance Federal Reserve Settlement services
Explore and assess the need for the Fed to participate in an operational mode
Recommend, develop, and implement fraud detection and reporting systems
Develop cross-solution education and advocacy
Research gaps in cross-border functionality and interoperability
Continue research on emerging technologies

19. Now What? GFFT – Governance Framework Formation Team
Formed to advance the first objective
27 members representing 7 segments
Three phases –
Design baseline components
Establish a governance framework
Operate and evolve that framework
A Directory Team is in the process of being formed

20. Where Do We Go From Here?
The claim is we’re behind the rest of the world and we should be a leader, not a follower
What’s the “demand” for faster or real-time payments?
Payment takeaways from AFP in San Diego:
54% think faster is a positive development
39% are indifferent
7% have a negative view
The devil’s in the details – it will take significant amounts of time and money to re-tool
The US market is different than most with many more FI’s and with no mandate the incentive to move to real-time is not that strong
Real-time WILL happen but expect it to evolve, not be a revolution

21. Stop Payments vs. WSUD for Operations Staff
Questions?
© UMACHA 2017; All rights reserved.