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When considering how to offer payments on your platform, two factors are likely top of mind: speed and cost. You want to know how quickly a transaction can move from Bank Account A to Bank Account B and how much it will cost your business.

Maybe you’ve typed “instant ACH” into Google to understand what your options are for faster payments beyond cards and wire transfers.

Let’s set the record straight: Payments on the Automated Clearing House (ACH) Network are not instant. “Instant ACH” does not exist. But you shouldn’t let that discourage you from offering ACH payments on your platform.

The ACH Network electronically moves money and related payment information quickly and securely from any financial institution account to another. Widespread adoption, a commitment to security and low-cost transfers are just a few of the reasons the ACH Network processed more than 29 billion payments in 2021.

Let’s dive into the various ways your business can use ACH payments to control the timing of transactions on your platform.

Payments Clear, Settle on the Same Day

We’ll start with the fastest payment option with the ACH Network. Selecting Same Day ACH transfer timing is the fastest way to initiate credit and debit transactions on the ACH Network.

With multiple settlement windows from which a business can initiate a credit or debit transaction via Same Day ACH, payments can be initiated and settled in the recipient’s bank account on the same business day. Your business may also be eligible to send up to $1 million per Same Day ACH transaction.

Investment platforms find value in Same Day ACH because it eliminates slow checks and expensive wire transfers. Over an 18-month period using Same Day ACH, this investment platform saw an 847% increase in transaction volume and a 506% increase in the number of transactions completed year over year on the platform.

“After some feedback from clients for faster payments, we added Same Day ACH. It was a quick win, and we’ve gotten a lot of positive feedback with the faster options.”
Co-Founder and Chief Product Officer, InvestNext
You can read the case study here.

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Control the Timing of Your Transactions

Next Day ACH transfers on the Dwolla Platform refer only to the debit portion of a transaction. If a Next Day ACH transfer is initiated prior to 4 p.m., it will be available in the Dwolla Network the next business day.

A marketplace for boat rentals uses Dwolla as its connection to the ACH Network. As transaction and end user activity increases during peak months, they tout that the payout process to boat owners using ACH is “effortless.”

Their use of Next Day ACH transfer timing ensures funds clear and settle in a boat owner’s bank account in one to two business days.

“We make payments really easy for our clients, it’s probably the easiest step for them. That’s why we’re using Dwolla’s service, to make our lives easier as a business.”
– Director of Finance, GetMyBoat
You can read the case study here.

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Bank to Bank Transfers with ACH

Bank to bank transfers with Dwolla are actually two separate ACH entries: one from the sender into the Dwolla Network (debit) and one out of the Dwolla Network to the receiver (credit).

A standard ACH debit with Dwolla will be available in the Dwolla Network three to four business days after a transfer is initiated, which serves to mitigate the risk of an ACH return. ACH returns may take at least two banking days to arrive after the transfer is initiated.

If a return is not received (and there are no fraud concerns) within the three to four day window, funds are made available in the receiving Dwolla Balance.

After funds are made available in the Dwolla Balance, the “credit” to the recipient will take place. Assuming the ACH credit transaction is initiated prior to 4 p.m., funds will be in the receiver’s bank account the following business day.

For example, a bank transfer initiated from a sender’s bank account at 4 p.m. on Monday would usually be received by the recipient’s bank account on Friday morning. Transfers initiated after 4 p.m. will start the ACH processing timeline on the next business day.

The standard ACH processing time for bank to bank transfers is typically five business days.

“Having any friction or delay while waiting for funds to clear via manual payment processes, sometimes a matter of days or weeks, can create a lot of user experience problems. By using Dwolla, we don’t see those problems.”
– Co-Founder and Chief Marketing Officer, Masterworks
You can read the case study here.

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Real-Time Payments: A Near Instant Solution

There are faster payment options outside of the ACH Network. Multiple real-time payment systems will be operational in the United States by the end of 2023. Currently, The Clearing House operates the RTP® network. In 2023, the Federal Reserve will launch its own real-time payments product, FedNow.

Real-time payments give recipients access to funds within seconds of the sending back initiating the transaction. Real-time payments are available 24/7/365 and are not subject to weekends or banking holidays.

Most payment modalities–including ACH, cards and checks–offer a way for the person making the payment to dispute, recall or stop a payment before or after it’s processed.

With the RTP network, all participants have agreed that once an RTP transaction is initiated, that transaction is final and irrevocable.

The RTP network is based on a “good funds model” and is currently a “credit push” payment system. A good funds model means participating banks are required to have funds available at the Federal Reserve at the time they initiate transactions. Sending financial institutions are not able to revoke or recall a payment once it has been authorized and submitted to the RTP network.

Sending financial institutions can ask a receiving bank to send back a payment initiated in error, but the receiving bank is not obligated to honor the request.

The finality of an RTP transaction allows participants to consider a payment complete without having to wait days or hours for the funds to actually become available. This also means that end users need to be vigilant about not sending payments in error or exposing their credentials to potential fraudsters.

Dwolla can be your connection to the ACH Network, RTP network and more—thanks to our financial institution partners. While “instant” payments don’t exist on the ACH Network, faster payment options like Same Day ACH, Next Day ACH and real-time payments are available for you and your end users.

Talk with one of our payments experts today to see how your use case could benefit from our suite of faster payment offerings and account-to-account transactions.
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