Posted by NationalACH on May 26, 2015
ACH processing

ACH Network Moves to Quicker Settlements

Let's face it.  The ACH network is having a hard time keeping up in these days of real time payment processing.

The ACH network was designed as a net settlement or batch payment system for single time or recurring payments.  As a result, settlements take 3 or more days.  from the moment the transaction is processed.

Settlement for ACH payments takes at least three business days due to the current functioning of the network. Once the bank of the payee receives the payment information, it will submit the details to its ACH regional operator. The operator will process the batch that it has received and submits the payment information to the banks from its region.

If the batch contains payments for banks located outside its region, the ACH operator will send the payment information to other ACH operators that can handle the settlement. The process is completed when the payee’s bank receives the amount, and the payer’s account is debited.

This simplified process illustrates why there is a delay between the day of the transaction and the settlement.

In the past year, however, at the request of consumers and businesses, and in an attempt to consolidate the ACH network, the National Automated Clearing House Association has been working on improving the process which, in time, will allow real-time, same-day settlement for all ACH transactions. The plan was first presented to the public in March, 2014, and since then, some progress has been made.

ACH Moves to the Modern Age

According to a recent press release, the association has obtained the necessary support from its voting membership which will allow it to proceed with the implementation of a phased introduction of same-day settlement. Even though payroll, person-to-person, and consumer bill payments will come first, in the long term, all entities part of the ACH network will benefit from decreased settlement time. The association pointed out that the phased introduction of same-day settlement will depend considerably on the willingness of all businesses to adapt to the new regulation, and contribute to industry moving forward.

As the first phase of the same-day settlement process is scheduled for September, 2016, the merchants who prefer faster settlement have the option of using Check 21 as an alternative to ACH. This payment method is recommended for merchants that have a low non-sufficient funds rate and few chargebacks.

The faster settlement time is made possible by the bank-to-bank processing, which is less time consuming compared to the normal flow that occurs within the ACH network described above. The customer, on the other hand, will not perceive any difference between Check 21 and ACH payments.


While the ACH network is working hard to upgrade processing for faster settlements, it still has a way to go. In the meantime, merchants that need faster processing are moving to electronic check processors that use echecks based on Check 21 technology.  

Are you interested in an echeck account to increase your sales & profits?

Contact today.