Faster payments are top of mind for many corporate treasurers as they consider NACHA’s same-day ACH system coming in 2016, the Federal Reserve’s Faster Payments Task Force, and the real-time system in development by The Clearing House. But that doesn’t mean they want or need them. Here is a summary of ongoing discussions:
- It is hard to gain consensus on what "faster" really means. Whether you’re sending or receiving, a consumer or a business, faster can mean many different things, all of which have vastly different implications to users of the system.
- Most treasurers feel that to have value, any faster payments system needs to accommodate high-value transactions. For some, this means that NACHA’s plan for same-day ACH, which currently has a limit of $25,000, will not meet their needs.
- Same-day ACH transactions will be optional if you're initiating payments. But starting in September everyone must be prepared to receive them. Billers will need to recognize consumer payments on the settlement date and update downstream accounts in a timely manner.
- With remittance processing systems, most paper check payments can be reconciled immediately, but this is not the case with ACH payments. Treasurers do not see the value in getting money any faster, before funds be can applied to an account. Electronic payments, they declare, need to be “smarter”, not just faster.
- Financial institutions may very well need to be available 24/7. Billers, at the very least, will need to update their internal systems to allow real-time customer payments to post immediately, or to retroactively post payments effective as of the time/date stamp on the payment.
- One challenge with faster payments is that due diligence will have to be real-time – not in an hour, or overnight, or the next day as many controls currently operate. With 62% of organizations already targets of payments fraud last year, there is general concern about how to overhaul our payments system while still effectively managing risk and mitigating fraud.