In May 2015, NACHA’s voting membership approved Same-Day ACH, an amendment to the NACHA Operating Rules to move payments faster. The rule enables a ubiquitous same-day capability for virtually any ACH transaction, creating options for the businesses, governments, and consumers who want to move money faster.
This approval opens the door for new opportunities for financial institutions, including creating options for smaller financial institutions. In a 24/7, internet-based environment, customers demand immediacy in payment, and smaller financial institutions are looking for innovative ways to meet those expectations.
NACHA interviewed Tammy Stolpp, senior vice-president with The Bank of Hemet, Calif., to discuss how Same-Day ACH impacts her $500 million-asset institution.
NACHA: How does Same-Day ACH support your business efforts?
Stolpp: Same-Day ACH keeps us relevant as a small community bank. Customers expect faster payments now, and we see demands increase every day. Same-Day ACH now will help keep us on an even playing field with big banks.
Same Day ACH allows us to continue to compete. We want to offer next-generation services. We don’t want to look like a small bank, and Same-Day ACH levels the playing field.
NACHA: What’s the business case for introducing this service?
Stolpp: While Same-Day ACH offers solutions for new products and services, it only truly creates an immediate opportunity if the financial institution has high enough origination volume. We plan to offer more solutions in a person-to-person environment with Same-Day ACH, but we have to start somewhere.
Because of this, the entry fee is a necessity for us to innovate. It gives us a buffer to help as we explore new products and services and gain customer buy-in and support. We’ve already been given a heads up that we’re going to face additional fees from our processor to implement Same-Day ACH, and we need to figure out how we will cover those costs. In addition, we need to evaluate our staffing needs and risk mitigation services. The entry fee will offset a fraction of these costs and allow us to focus on building origination services that meet our customers’ needs.
NACHA: How will you use Same-Day ACH to provide expanded services to your customers?
Stolpp: With its implementation, Same-Day ACH will solve emergency payroll issues and lessen the impact missed files or other payroll problems have both on the bank and the originator.
When you have an originator that has thousands of items and a massive payroll, if a deadline is missed, it’s really hard on everyone. For example, we have municipalities as customers that have contractual agreements that mandate that their employees get paid in a certain way at a certain time. It’s a nightmare to issue manual checks. Same-Day ACH will now be a huge safety net for our customers.
NACHA: What new services will you introduce by leveraging Same-Day ACH?
Stolpp: We see opportunities for business customers encouraging them to take advantage of the faster movement of funds and may even build the service into a premier package for certain business types. Right now, our customer base is largely consumers, but we are expanding on the business side, and Same-Day ACH will help us do that.
We also really want to use Same-Day ACH for our consumer accounts. It provides a strong avenue to enable P2P payments, in particular. It will allow us to get our customers their funds quicker, and it enables us to compete with new entrants in the P2P space. It’s going to put us in line with other bank and non-bank providers.
Honestly, there are a lot of opportunities, and we haven’t even explored all of them yet.