There has been a lot of talk around Same-Day ACH, an affordable, reliable, and secure way to transfer funds between US bank accounts on the same business day. The new enhancement, which begins phase 1 of its roll out September of 2016, could be a game changer, but how will it help you?
To give a better understanding, we’re introducing a series exploring how some Same-Day ACH use cases could impact and benefit businesses, consumers, and financial institutions.
Outlining Same-Day ACH Benefits
Every business is different, so the application and use cases of Same-Day ACH will depend on everything from business models to payment flows, operations to risk, and end-user experience to you name it…Here are a just a few “generic” benefits for businesses and platforms.
Treasurers can focus on the certainty of payments and efficiency savings. For one, Same-Day offers another incentive for accounts receivable and accounts payable departments to transition away from paying with costly paper checks and receive electronic payments instead.
Improved control and flexibility with payroll. Same-Day ACH could be a godsend in the case of a processing mistake—which unfortunately happens, e.g. incomplete payroll file—or a cash flow strained business. Same-Day ACH would allow a company to remedy the file mistake or initiate a payment last—e.g. once they get paid from their buyers—and still potentially process it all on the same business day.
Another quirky use case is for termination of employees. According to Treasury and Risk, there are some states that mandate a terminated employee must be paid in full what is owed to them on the day they are terminated. This would allow an accounting department to simply calculate time worked and initiate the payment via Same-Day ACH.
Payouts for the gig, on-demand, and marketplace economies could come faster. These new business models and platforms, which connect vendors with buyers, are constantly competing with each other for participants (e.g. Uber vs. Lyft for drivers, Airbnb vs. HomeAway for listings, Etsy vs. Jane for creators, etc.). Today, unfortunately, the flexible income offered by these marketplaces doesn’t mean timely payment for the service or product produced.
Here, affordable same-day payouts could become a powerful differentiator in recruiting suppliers. We’ve actually already started to see this movement by Uber and PopularPays, two companies looking to add faster liquidity as a competitive advantage to draw in talent.
Consistency with more on-time payment of services. As we know, an initiated ACH Payment on a due date is just a late payment three to four business days later (and heaven forbid a customer sends you a check); delays don’t help you pay your creditors off any faster. Setting up business processes that encourage and handle Same-Day ACH payments provides improved flexibility, certainty, and potential savings for paying on time (if offered by the creditor).
Reliable cash flow means smarter business decisions.
The proverbial question:
How will providers offer this new functionality? What will the extra costs be? Will it be through simple, clean, and robust APIs with painless on-boarding experiences? Or will it be like standard ACH with antiquated VPNs, XMLs, and painful user experiences?
To us, the true power of faster payments isn’t about the speed, but it’s the business value they provide. At Dwolla, we provide a dynamic on-ramp to the ACH network and its future improvements. Our flexible API, infrastructure, and expertise in bank transfers offer one of the nation’s most robust platforms. If you’re interested in Same-Day ACH (or standard ACH) we’d like to hear from you.
Read all the posts in the series:
Interested in how your business could be utilizing the Access API within your platform or application? Reach out to our sales team.