Effective September 15th, payments and transfers made via ACH will be debited (withdrawn) from your account on the same-day they are initiated. This change is being implemented to comply with NACHA’s (National Automated Clearing House Association) new rules for same day ACH processing.
What are ACH debits? ACH debit payments are any payments taken directly from your savings and/or checking account. These could include credit card, mortgage or utility bill payments made directly to the merchant. For example, when establishing your electric bill payment through the company’s website, you are asked to enter your account number and financial instuition’s routing number. Through the ACH network, the funds are withdrawn directly from your account, sent to the electric company’s financial institution and applied to your bill. ACH debits do not include charges made with your debit or credit card, or through online banking bill pay.
With same-day ACH debits, you can be sure a merchant receives your payment on time, which helps you avoid late payments and late fees. Currently there is a one or two day window between the time an ACH debit is made and when it is withdrawn from your account, so it’s important to note these new changes.
Read our FAQs below to learn more about ACH payments and what changes you can expect:
1. What is ACH?
ACH stands for Automated Clearing House, and is governed by NACHA (National Automated Clearing House Association). It is the system that makes transfers from one financial institution to another to allow both consumers and businesses to make payments and receive funds.
2. What are examples of ACH transactions?
- ACH Direct Deposit: This transaction occurs when you receive funds directly into your account, such as your payroll check, government benefits, taxes and other refunds, retirement benefits, etc.
- ACH Credit: This ACH transaction transfers funds into another account. Payments made through Online Banking Bill Pay is an example of an ACH credit payment. Through Bill Pay, you authorize Jeanne D’Arc Credit Union to credit a person or company’s account (i.e. your landlord) from your account using their account number and routing number.
- ACH Debit: This ACH transaction pulls funds directly from your savings or checking account. If you initiate payments for your mortgage, credit card or utility bill with the merchant, in person, on the phone, or through their website, the merchant uses your account number and routing number to withdraw the payment from your account.
ACH transactions do not include any payments made with your debit or credit card.
3. What changes can I expect?
To comply with NACHA’s new rules for same day ACH processing, changes to ACH Debit Payments will be implemented on September 15, 2017.
ACH debits, whether single or recurring, will be withdrawn from your account on the same day you make a payment. Currently there is a one to two business day window between the time a payment is made and when it is withdrawn from your account. This new same day process helps to ensure on-time payments, which will help you avoid late payments and any associated fees.
It’s also important to note that these payments will be processed multiple times per day, not just in the morning. Therefore you could see withdrawals from your account throughout the day.
While all financial institutions are required to follow these new NACHA guidelines, not all merchants will participate in same day ACH debits, therefore there could still be a one to two business day delay before some of your payments are withdrawn from your account. It is still important that you take this new process into consideration when initiating ACH debit payments.
4. How do I prepare for the changes?
Always make sure you have a sufficient amount of funds in your account to cover any payments made. If you make a payment without proper funds, and assume it will be withdrawn from your account in one or two business days, you could be at risk of overdrawing your account. Remember the new process goes into effect on September 15, 2017.