The implementation of the final phase of same-day electronic payment processing via Automated Clearing House (ACH) was just completed in March. With same-day processing, ACH entries can now be initiated and settled on the same day. But other, faster payment processing options continue to grow and are in high demand by consumers and businesses. For example, Venmo is a payment application created by PayPal that enables users to pay or request payment that settles instantly in the users’ Venmo accounts. Zelle and PopMoney, just to name a couple, are other third-party applications or features offered by many financial institutions to move money faster. Similar options are many, and there are still new, comparable applications being created. NACHA, the governor and developer of the ACH network, has already requested feedback for additional enhancements to same-day ACH processing. To me, this is necessary for ACH processing to stay relevant in this faster-paced environment.
Where will we all end up? It’s still too early to say, but change is definitely upon us. It is clear that faster money movement is in demand and that financial institutions of all sizes need to be aware so they don’t get left in the dust. A financial institution looking to add payment applications for its customers should make sure it does its due diligence, regardless of whether it creates its own application or uses a third party. Staying abreast of ACH changes is also important. The picket line for demanding faster money movement is marching, whether you can hear it or not.
If you would like assistance with analyzing the risks and defining the due diligence for faster payment and other FinTech innovations, call, text, or email your Wipfli contact.