Fed pumps the brakes on Nacha plan for faster Same-Day ACH

After more than two years of successful operation in delivering Same-Day ACH payments, Nacha's request to add a third processing window has been delayed by the Federal Reserve, which says it has to obtain public comment on the concept.

As much as anything, the delay sends some sparks about whether faster payments providers can wait on Fed approval for systems they consider vital to the overall goal of faster payments in the U.S.

Nacha was looking to add another processing window that would provide more flexibility and even faster processing times than the Same-Day payments that now occur within hours in most cases. In effect, with the Fed throwing up a stop sign, the new processing window could be delayed far beyond what Nacha was hoping would be a September 2020 launch.

"It seems like there is more going on here with the Fed than meets the eye," said Sarah Grotta, director of debit card advisory for Mercator Advisory Group in Boston.

It doesn't sound plausible that the Fed cannot complete its process on notification within Nacha's time frame, Grotta said.

"If it is correct," she said, "the next question that comes to mind is whether this is the organization we want building and maintaining a real-time payments platform that needs to be agile enough to keep pace with changes in the global markets."

Nacha had approved its rule in September of 2018 to add the extra processing times with what it called "overwhelming support" from its membership. That approval established an effective date of Sept. 18, 2020, "contingent on receiving timely notification from the Fed Board of changes to the Federal Reserve services necessary to support the Same-Day ACH processing window," according to an executive summary on the Nacha website.

But the Federal Reserve Board on March 12 informed Nacha it could not provide that notification by a June 30 deadline. The rule provides the effective date will be deferred six months to March 19, 2021.

The delay comes not long after the Fed had sought public opinion on faster payments, and pitched a more hands-on role for the Fed. That's been a concept that larger banks have been hesitant to support.

It also comes against the backdrop of faster payments systems and money-transfer systems being launched regularly by payments providers.

Nacha said it is unclear when a public comment notice would be issued as part of the process. Nacha worked closely with the Federal Reserve to make sure it was in compliance with rules before its Same-Day ACH launch in September of 2016.

Since then, Nacha has reported on numerous occasions the success of the transition to faster payments, citing 178 million same-day transactions taking place through the network in 2018, the first year in which both credits and debits were available.