Same Day ACH – Parity With Checks, But What About Cards?
Erin McCune and I attended the Association for Finance Professionals conference in San Francisco on Monday and Tuesday. With 4,000 plus “practitioners” and vendors there, and a robust Payments Track, there was a lot of food for thought. A standout session was “Same Day ACH” with Rich Oliver of the Fed (and the champion of the Fed’s proposed service), Peter Davey of Cap One, and Stephen Ledford of McKinsey.
The same day ACH proposal has most typically been talked about as a service which will apply to check conversion transactions – to enable electronics to clear as fast as paper would (don’t you love that). But I had not realized before that the Fed is also talking about this applying to WEB transactions. This would mean all those alternative-payment schemes for eCommerce could clear faster than card transactions! This won’t be immediately realizable, as long as the service is strictly opt-in, as it is currently being proposed. That would mean that the timing of a merchant settlement would depend on where the consumer banks, and if that bank had opted in. But if it moves into the main stream, as a service that all banks must (by rule or practicality) adopt, it could create a significant advantage for ACH funded purchasing products.
Later that day, we interviewed a senior executive at a top three bank. He said he worried about banks “creating value without return.” I can see why he might be worried.