ACH or Automated Clearing House has revolutionized the electronic transfer of funds among businesses, financial institutions, and individuals in the US. However, same-day ACH transfers have taken everything further by allowing faster settlement than the traditional transfer process. It’s evident that this new form of funds transfer has drastically enhanced ACH transfer funds within the US, owing to the $1.2 trillion payments made in the first half of 2023, according to a Nacha press release.
If you’re a Merchant Cash Advance (MCA) vendor or in the commercial funding space and looking for a reliable same-day ACH transfer service, ACHWorks offers a convenient option. Meanwhile, here’s what you should know about same-day ACH transfer and how it can help you transform your business.
What is a Same-day ACH Transfer?
Same-day ACH transfer is an improved ACH funds transfer process that allows debit and credit processing and return transactions several times daily. This payment method, introduced on September 23, 2016, extends from the existing ACH payment service that would take 2-3 days to process. This fast ACH funds transfer method resulted from constant lobbying from financial institutions and experts for a quicker transaction method.
It’s crucial to note that same-day ACH transfers are fast, but not instant. The Federal Reserve has established meticulous schedules for the timeline by which users can transact funds across the network and expect their transactions to settle. This includes three scheduled timelines:
- A morning submission deadline of 10:30 AM with a 1:00 PM EST Settlement
- An afternoon submission deadline of 2:45 PM with a 5:00 PM EST Settlement
- A third submission deadline of 4:45 PM with a 6:00 PM EST Settlement
Apart from the additional settlement timeline, the Fed allowed a higher limit for same-day transactions, increasing the limit from $25,000 per day to $100,000. As of March 2022, The National Automated Clearing House Association (Nacha) raised the transaction to $ 1 million.
Notable Use Cases for Same-day ACH
Nacha identified 63 use cases for same-day ACH transfers. Some of the notable cases include:
- Commissions, payments and other bonuses
- Online/internet payment
- Merchant debit payments
- Person-to-person payments
- Urgent claim payments and refunds
Benefits of Same-day ACH
Same-day ACH transfer offers a substantial number of benefits than other payment methods. Some of the benefits you can get through this payment method include the following:
- Lower transaction cost: Typically, a same-day ACH transfer costs $1-$1.50 per payment, while a wire transfer costs $25-$50.
- Allows recurring transactions: Same-day ACH transfer can be particularly beneficial due to its convenience in automating and speeding up accounts payable.
- Security: This form of payment is more secure than manual transactions since the payee and payer can set up payments without requesting account information every time the company needs to make a payment.
- On-time Payment: If you’re running a business that requires same-day payments to your employees or partners, same-day ACH payment is a suitable payment option that would guarantee they’re paid before the close of business.
- Allows payment from different banks: One of the greatest advantages of same-day ACH is that it enables transactions across every bank in the US. This differs from wire transfers and RTP, which are limited to some banks. Therefore, same-day ACH transfer would improve reporting accuracy using multiple banks and credit accounts. This benefits companies that move money from primary accounts to sub-accounts or pay credit bills and want their accounts to reflect these transactions as soon as possible.
- Improve cash flow and management: Same-day ACH transfer ensures fast and efficient funds transfer, improving available operational cash for merchants or partners.
- High transaction limit: With the introduction of a $1,000,000 transfer limit, service-based businesses now have an improved cash flow, especially those that make 5- and 6-figure daily transactions.
How Same-day ACH Transfers are Transforming Merchant Cash Advance Industry and other Businesses
Same-day ACH transfer is a valuable tool that can benefit the Merchant Cash Advance industry and other merchants. It’s also a suitable platform for merchant cash advance vendors. Here’s a closer look at how these two entities can benefit from it.
How Same-day ACH Transfers Benefit Businesses
Businesses can benefit from same-day ACH transfers in different ways. For instance, it allows transactions for multiple payments, especially for organizations that rely on subscriptions or membership fees. Since the ACH network allows batch transactions, which settle at specific intervals in a business day, this makes online transactions made faster and easier.
Same-day ACH allows you to fund a merchant the same day at a fraction of the cost of a wire transfer. If your internal collections department reaches a distressed customer, and the customer indicates they have funds available for payment, debit those funds today with Same Day ACH instead of waiting until the next banking day, when the funds may be gone.
Same-day ACH transfer allows integration with accounting systems. This makes it easier to manage finances and keep track of their transactions. Businesses can use various tools to automate funds transfer, such as APIs, batch files and cloud services.
How Same-day ACH Transfers Are Benefiting MCA Vendors
If you’re a MCA vendor, using same-day ACH transfer in your business would result in several advantages. They include efficient and reliable monetary transfers to merchants or partners, and offer a fast repayment process. This ensures that merchants and brokers receive their running cash or their commissions and bonuses faster. This strengthens the relationship with both clients and partners, and creates incentive for broker to recommend one MCA over another.
Same-day ACH repayment also helps maintain predictable cash flows for MCA vendors since merchants can repay their loans faster. Therefore, this helps maintain consistent cash flow, a crucial aspect of their financing ability. MCA vendors leveraging same-day ACH transfers can also allow flexible daily payment schedules tailored to their regular merchants’ income.
Transform Your Business with ACHWorks’ Same-day ACH Transfers
Gone are the days when you had to wait up to three business days for a transaction to settle. Same-day ACH transfers have proven to be a game-changer in ensuring your transfer settles within one business day as long as the transaction occurs within the required window. This comes with a higher limit of up to $1 Million per transaction. This significantly helped Merchant Cash Advance vendors and other businesses facilitate their transactions better and faster.
Same-day ACH transfers are easily used through an ACH Virtual Terminal (web portal), through our robust payment API’s (SOAP & REST) or a combination of both. The integration options fit various use cases and are customizable to various business needs.
Are you a Merchant Cash Advance vendor or a business looking for a reliable same-day ACH funds transfer service? ACHWorks offers same-day ACH transfers that you can depend on. Our service comes with easy integration with your accounting software, dedicated customer support, and pricing transparency, among other benefits. Contact us today, and let’s help you take advantage of our same-day ACH transfers and grow your business.