Same-Day ACH Fee Resembles Controversial Interchange Fees

NACHA membership has just approved its Same-Day ACH proposal. Same-day capability will be implemented in three phases over an 18-month period starting in September 2016.

However, there is one element of the proposal that has struck a nerve with merchants - an interbank fee on each transaction to be paid by originating institutions to receiving institutions. NACHA had estimated that receiving financial institutions will incur $49 million in net new operating costs and $118 million in implementation costs related to the same-day plan by 2027. Much of these costs are related to the need for stricter review of transactions for risk, more comprehensive reporting systems, and more due diligence directed at originators. The interbank fee is a mechanism for RDFIs to recover the costs, plus a reasonable rate of return. Originally proposed at 8.2 cents, this Same Day Entry Fee has been modified to an estimated 5.2 cents.

Originating banks will probably pass all or most of the fee on to their merchant clients. Merchant groups object that the fee is too high and might discourage merchants from using the service. They also object to the idea of price-setting by a central authority, in this case NACHA, rather than fees being negotiated between banks. It’s all painfully familiar to merchants who already bear the cost of interchange fees for card transactions, which are passed on to them by acquirers.