Payments Views


Bankers to NACHA: 1978 Is Modern Enough for Us!

The NACHA membership has reportedly turned down the concept of “Same Day ACH“. This was a request for comment, put out about a year ago by NACHA staff, to — get ready for this — not move the ACH to same day, but simply allow originating banks the option of submitting a same day batch into the current system. The receiving banks would have been required to participate.

I file this in the “don’t worry about online music, CD’s work just fine” folder. What were the bankers thinking of? I know, I know – protecting their current wire transfer revenues, avoiding the expense of dealing with a same day batch, and possibly protecting the nascent clearXchange network. But I don’t think these reasons are good enough. In the meantime, non-bank competitors are making same-day money happen today – when you transfer by PayPal, for example, the receiver generally gets credit toward their PayPal balance the same day.

For those of you focused on the operational difficulties of same day transfers, think of this: all credit and debit card transactions in the U.S. are authorized instantly. If that message can be processed, so could the actual transfer!

Some of you may know that I am fascinated by developments in real-time consumer transfers around the world. The U.K. led the way with their “Faster Payments Service” (actually, mini same-day batches, but effectively working as real time transfers). Mexico is doing incredible things with their SPEI wire transfer system – essentially opening it up for consumer use. I understand that other countries (Singapore, the Netherlands – let me know if there are more!) have similar services in the market or under way.

In Australia, the Reserve Bank recently issued a paper calling for real time payments by 2016 – and putting banks on notice that they need to make this happen. Who is playing that role in the United States?

Why is this important? Well, in addition to the potential to transform bill payment, P2P and B2B payments, think about the implication at the point of sale. Banco de México is currently mandating an end-to-end “lapse” time of 30 seconds (it started at 30 minutes). Think about what could happen if that got down to a few seconds. A consumer with a mobile device could push a good-funds, fraud-controlled payment to a merchant in real time. No card network authorization transaction needed!

Today, I can order some gadgets for my kitchen from and have them delivered by tomorrow morning – much faster than my credit card payment for those gadgets clears. And I understand that Amazon and others are working on same day delivery of goods…

Come on bankers, we can do better!