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Same Day ACH is Here! (sort of)


Same Day ACH becomes effective on Friday, September 23rd, 2016, and one of its primary uses will be for the Direct Deposit of payroll transactions.  Rather than the 1-2 day window for current ACH, payments will settle the same day for Same Day ACH.  Employers should understand how they can effectively use this for those same day deposit needs.  The nation’s 12,000 financial institutions will be implementing Same Day ACH, although some institutions may take longer than the end of business day to credit some employees’ accounts.  By March 2018, all financial institutions will credit Same Day ACH deposits to employees’ accounts by 5:00 pm local time.

In the event a payroll deadline is missed, Same Day ACH will allow employers to get their employee paid on time.  For example, if you miss your payroll transmission cutoff on Thursday for a Friday check date, Same Day ACH would enable a payroll deposit file to be submitted by Friday morning and ensure funds are available to employees Friday afternoon.  Another use would be for employers in a state with a need to fund a terminated employee with all wages owed on the day of termination.  Those states include California, Colorado, Hawaii, Illinois, Massachusetts, Minnesota, Missouri, Montana, and Nevada.  Same Day ACH would enable this requirement to be met without having to write a check or pay with cash to an employee who has direct deposit.

There are a few important items to note:
• Your bank/ACH processor/payroll service may not allow Same Day ACH origination.
• Same Day ACH will only apply to Credits (payments) until September 2017 at which time Debits will be allowed.
• Same Day ACH payments are limited to $25,000 or less to each direct deposit account.
• Same Day ACH payments cannot be used for international payments.
• The U.S. Government will not be participating in the receipt of Same Day ACH transactions at this time. This means that you will not be able to send payments for federal tax deposits or other purposes to the U.S. Treasury/IRS.  Any payment that is sent with a Same Day ACH will be credited the following business day.
• There are two Same Day ACH settlement windows with the latest one requiring ACH files to be received by the ODFI (Originating Depository Financial Institution) by 2:45pm for a 5:00pm settlement. Note that the RDFI (Receiving Financial Institution) sets receiver funds availability.
• There will be additional fees charged by your bank/ACH processor/payroll service for Same Day ACH transactions. It will be much less than the alternatives of Wire Transfers.

The easy part of this is implementation.  There will not be any changes to the ACH file format, and simply by coding “today’s” date in the Effective Entry Date field will trigger Same Day ACH for that transaction.

All in all, this is a good start to a process that has been talked about for almost a decade.  By March 16, 2018, the date set for the final round of implementation, we should have a full feature, Same Day settlement means other than expensive and tedious Wire transfers.


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