?On October 24, the Electronic Payments Association announced that it was extending the comment period for its Request for Comment on “Expedited Processing and Settlement” (EPS), from November 18 to December 12. The Request for Comment, originally released September 23, seeks comment on the proposed EPS amendments to the NACHA Operating Rules. Current ACH rules require settlement to occur after one banking day for ACH debits (and up to two banking days for ACH credits). EPS would provide for a 2 PM Eastern cutoff time for the submission of ACH entries, which would then settle at 5 PM Eastern the same day.
EPS is a major potential development, as it would place traditional ACH into a more competitive position relative to other networks and payment methods that increasingly offer faster settlement. Moreover, same-day service has become increasingly important for mitigating against risk by reducing exposure and providing a transaction experience that is more consistent with consumer and market expectations.
Unlike the Federal Reserve’s current “FedACH SameDay Service,” which provides same-day processing for converted check payments as well as TEL and WEB payments, the proposed amendments would, generally speaking, make EPS mandatory. Indeed, one of the reasons why the FedACH is not as popular as perhaps originally anticipated is because it is optional for ODFIs and RDFIs. In other words, if an RDFI has not “opted-into” the FedACH program, it is irrelevant whether a particular ODFI wants to utilize FedACH.
While some transactions may not benefit greatly from EPS – such as recurring bill payments or payroll direct deposit where one- or two-day delays are inconsequential (if not preferable) – many other transaction types, in particular P2P payments via online or mobile banking, stand to gain much from EPS. Recognizing that the market is increasingly demanding more rapid and flexible payment solutions, NACHA also anticipates that EPS would enhance the utility of disaster assistance payments, tax payments, cash concentration, reversals, and administrative transactions via ACH.
Among other issues open for comment include per-entry dollar limits, RDFI funds availability, ACH operator processing and settlement schedules, RDFI file delivery/pick-up, and transaction posting order.
If approved by the end of Q1 2012, NACHA anticipates that the EPS rules would become effective March 15, 2013, giving financial institutions and processors approximately one year to implement EPS.