Same-Day ACH: Everything You’d Ever Want to Know

By Ziwei Chen

Content Marketing Specialist, Relay

From paying your employees, to paying your bills online — the Automated Clearing House (ACH) payments are just about everywhere. 

And not too long ago, the National Automated Clearing House Association (NACHA) rolled out same-day ACH payments. These payments allow money to flow from one bank account to another with same-day processing, allowing for faster settlement times for payments.

Having the option for faster payments using same-day ACH has drastically improved things for businesses and consumers alike. If you bank with us here at Relay, you have the option of sending either same-day or next-day ACH payments, so we put together an overview of everything you need to know about this payment method.

In this article, we’ll cover:

Let’s dive in. 👇

What is ACH?

ACH, or Automated Clearing House, was established to allow different banks to transfer funds electronically. It is an electronic batch processing system that banks, such as the federal reserve banks and other financial institutions, use to bundle transactions for processing.

The ACH network, governed by the National Automated Clearing House Association (NACHA), is used for many direct deposit and payment transactions, such as payroll and bill payments. However, until same-day ACH was introduced, the funds would take a few days to settle. 

“Settling” is the process of banks matching their debits and credits between each other, in bulk. When the numbers match, these financial institutions settle what they owe each other at once. This is done in bulk because matching every single payment individually would make the cost of payment processing prohibitively expensive. Because of this bulk matching, ACH payments are cheaper than other types of transactions.

What’s the difference between ACH and same-day ACH?

Same-day ACH simply means that banks settle payments multiple times per day, whereas regular ACH payments are settled at multiple points throughout the week.

How does ACH work? 

At a basic level, a single ACH transaction is simply an electronic file that contains some information. This includes things like the amount, where the transaction comes from, where it's going, and other relevant data. Every day, numerous such files are sent from each bank (known as the "originating depository financial institution, or ODFI) to the ACH network. 

After the ACH network has collected these files, ACH operators then rebundles and transfers them to what are known as “receiving depository financial institutions” or RDFIs. In plain terms, you can think of RDFIs as banks (and other financial institutions) who have agreed to adhere to certain responsibilities when it comes to accepting ACH. These responsibilities include things like accepting and validating received ACH entries, and promptly notifying originators (or ODFIs) about any incorrect information on entries.

ACH payment processing timelines 

ACH payments can take a few days to process — typically one to two. There are also cut-off times each day where a transfer will not be settled and processed until the next day. This processing window can also be delayed if an error code is returned, such as insufficient funds.

Additionally, “same-day” isn’t instant. There are meticulous schedules for when transactions batch and settle each day. The Federal Reserve has a same-day ACH resource center that details posting times (when funds move) for various types of ACH transactions. Cut-off times may also vary depending on both the originating and accepting institution. 

Here are the cut-off times for different types of payments for Relay customers as an example:

Outgoing Transaction Type

Cut-Off Time

Est. Settlement Time

Regular ACH

3:00 p.m. PST /

6:00 p.m. EST

1-2 business days

Same Day ACH

9:00 a.m. PST /

12:00 p.m. EST

Same business day

Domestic Wire

12:00 p.m. PST /

3:00 p.m. EST

End of same business day if sent before cut-off

End of next business day is sent after cut-off

International Wire

N/A

Varies. Approximately 2-5 business days

Check sent by mail

3:00 p.m PST /

6:00 p.m. EST

8-10 business days

Benefits of using ACH over other payments

So, why would you want to send ACH payments over something else?

Lower transaction costs — ACH payments are one of the most cost-effective payment methods and can help merchants save on their processing fees. ACH payments vary by processor and bank but usually cost under $1, regardless of the amount paid. (Though you pay more for same-day ACH.) In comparison, credit card transactions cost around 2% of the payment amount and wire transactions can cost between $10 to $35 per transaction. 

Reduced payment failures — Credit cards can easily be lost, stolen, or expire, so setting up electronic ACH payments reduces the risk of any payment failure. Once account numbers are set up correctly, all transactions go through except in the event of insufficient funds.

Security —ACH payments are more secure than manual transactions due to both parties setting up recurring payments rather than requesting payment information each time. For instance, when you direct deposit employee pay via ACH, instead of a paper check, you save yourself the time and potential error of manually writing a check during each pay period. ACH also mitigates many common security issues such as misused credit card information, wire transfers sent to the wrong recipients and cash theft.

Recurring transactions —Recurring transactions are convenient for both parties and can help automate and speed up accounts payable. Customers don't have to worry about missing a payment, and businesses don't have to constantly remind customers to pay.

The implementation of same-day ACH

In 2016, NACHA debuted same-day ACH credits and in 2017 introduced same-day ACH debits. Suddenly, businesses were able to send up to $25,000 across the United States in one day.

In 2020, the same day ACH dollar limit per transaction rose from $25,000 to $100,000.

Fast forward to 2022 and ACH payments are settled four times each business day, with a transaction limit of $1 million.

The ACH network keeps getting better to meet the needs for fast and efficient payments.

Benefits of same-day ACH processing

Same-day ACH services haven’t been around for very long, but they’ve already significantly impacted how people manage their finances. You likely regularly use ACH, but how does this same-day transaction method benefit business owners like you further? 

Improve cash flow forecasting and cash management — Many small businesses rely on fast settlement windows on invoice payments to improve cash-on-hand. If you’re stuck in net 30-90 day payment terms, liquidity is an issue. Setting up ACH agreements with clients reduces the need for interest-bearing funding (lines of credit, credit cards, etc.). Plus, the money is in the account within 24 business hours.

Faster account-to-account transfers— If you use multiple bank and credit accounts, ACH improves reporting accuracy. Companies who move money from a primary account to a sub-account, or pay a credit card bill, want their accounts to reflect these transactions as quickly as possible.

High transaction limit— Service-based businesses sometimes have 5 and 6-figure transactions, incoming and outgoing. Getting same-day settlement can improve cash flow significantly. And having the option to send same-day payments to your vendors can sometimes help you avoid hurting those vendor relationships.

Reduce cost for expedited payments — Same-day ACH saves you money when you need a payment to reach someone ASAP. For instance, if you really need to get material headed your way, sending the vendor a same-day ACH is much cheaper than other forms of payment.

Same-day payroll — Where would you be without your team? Small business employees who know that money will hit their accounts on payday is an important element of trust and job security. Same-day ACH helps you ensure that your team gets paid on time. 

Send same-day ACH transactions with Relay

If you’re looking for a business banking solution that lets you send same-day ACH payments and gives you full control over your day-to-day money management, consider trying out Relay.

Relay is an online banking and money management platform built to keep small business owners on the money, and make sure you understand exactly what you’re spending, earning and saving. You can apply for an account online in as little as 10 minutes: sign up here.