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!

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Ketharaman Swaminathan (GTM360 Marketing Solutions)

InstaCart charges US$ 9.99 for one hour delivery of groceries. I don’t know how much Amazon is planning to charge for its same day delivery service. But, one thing is clear: Regulators won’t stipulate the figure. However, the same can’t be said for US banks. By limiting fees – and, hence, their revenues – recent American regulation is bound to thwart innovation by banks. If experts like PaymentsViews and the common American public sincerely believe that American banks still make obscene profits, appealing to regulators to mandate same day ACH at affordable fees is perhaps the best way of making it happen. While it’s public knowledge, most analysts don’t recall that FPS came into existence in UK through an edict from the Office of Fair Trading – not exactly because banks were dying to be innovative or offer superior service to their customers.

Dion Lisle
9 years ago

Carol, the best headline for a banker story in a long time. Followed by the best metaphor, on-line music, “but I have CD’s.” I am worried that bankers more than any business species alive just can’t seem to adapt. Dinosaurs ? Great insights, thanks for sharing.

Simon Lelieveldt
9 years ago

Just a minor note: the quick intra-day settlement was already introduced in the Netherlands in 2001 (with the change to the euro) resulting in sameday transfer/settlement. See also the description of lot-settlement on p 24-27 in the DNB Quarterly Bulletin (

Josh Karoly
Josh Karoly
9 years ago

I think trying to force change by means of regulation in a market that is still free enough to force the changes through innovative entrants is more damaging than it is helpful. It will cost the taxpayer less if the market can force the change instead of a regulating body.

We are moving toward instant money transfers. Banks can either build the system or lose potential revenue to others who build the system. If they don’t change soon, they will be forced to change or die by the market itself and not by government regulation.

Thanks for the article. I’m said to hear the news, but I loved hearing your viewpoint.