Change Is Coming in Payments—5 Updates

By Kevin Garlan – Payments Product Lead, Transaction Banking 

We all know that the nature of payments in the U.S. is changing. The progress may seem slow and incremental at times, but the cumulative effect is starting to become palpable. The system for automated same-day payments is improving, becoming more convenient and more useful. And the era of real-time payments is getting tantalizingly close, with higher limits on the amounts that can be moved and an entirely new network being readied by the Federal Reserve. 

Indeed, new developments in the payments realm are coming fast enough that we think it’s time to capture and analyze some of the news. In this post, we walk through several important changes in the payments state of play that are worth keeping on your radar for 2021 and beyond.

1. Extended Same-day ACH payments

The Federal Reserve has added a third window, for accepting and processing same-day ACH payments. This change, in the works for more than two years, gets us closer to the goal of having more ACH transactions settled same-day. The change went into effect March 19, 2021.

Before the change, the latest window for processing same-day debits and credits was 2:45 p.m. Eastern time, which meant clients on the West Coast had to meet an 11:45 a.m. Pacific time cutoff—hardly ideal for managing a treasury operation.

Now, the third window, ending at 4:45 p.m. Eastern time, makes same-day ACH payments possible later into the business day. In order to facilitate appropriate processing and control checks, Goldman Sachs Transaction Banking (TxB) will accept same-day ACH requests up to 3:15 p.m. Eastern time. This is a big step forward, expanding the operating hours in which a corporate treasury can execute payments and giving West Coast corporates a bit more bandwidth for payments processing in their time zone.

2. Proposals for transaction limits on Same-Day ACH and Real-Time Payments (RTP) under discussion

Currently, the transaction limit on same-day ACH payments and RTP is $100,000 and there are ongoing discussions within NACHA and The Clearinghouse to increase the limit to $1,000,000 per transaction. 

3. Timing for wire payments is extended

The Federal Reserve has also changed the timing for Fedwire payments, in support of the new ACH payments window. The deadline for Fedwire Funds instructions has been pushed later into the evening, and TxB will now accept Fedwire payment instructions as late as 6:15 p.m. Eastern time. 

4. New rules to increase the safety of web-based ACH transactions

In another development related to ACH payments, businesses are now responsible for account validation for any ACH debit initiated or authorized online (with SEC Code WEB). This is a change meant to reduce instances when a payment instruction is submitted and then fails because the account is closed or has insufficient funds (or for some other reason). This new rule also went into effect March 19, 2021, but NACHA is giving corporates one year to implement the necessary system changes before beginning enforcement in 2022. 

5. FedNow is coming

If you want to know not just what changes are occurring now but what will change the game in the future, then look no further than FedNow instant payments.

FedNow is the Federal Reserve’s real-time payments initiative, expected to be in test mode next year and operational in 2023. This is likely to be the future of payments, settling payments in a matter of seconds, running 24 hours a day and 365 days a year, and run by the Fed. It seeks to make safe and efficient instant payments a reality for financial institutions of all sizes in every community across the U.S. and for their business and consumer clients.

Goldman Sachs TxB is among the organizations participating in the FedNow Pilot Program. We’re at the table, helping to develop, test and implement the new system—and advance services and use cases that leverage FedNow functionality with testing planned to begin across the Pilot Program in 2022.

Bringing change

The updates in this post reflect events that affect banking across the board, with every financial institution making its own decisions about how they will adjust to the changes—or how they can lead the way. At Goldman Sachs TxB, our promise to clients is that we will always keep their needs front-of-mind, leaning into every opportunity to make payments faster, more convenient or more relevant. As a new entrant in the transaction banking business, we have both a culture and a technology platform that allow us to be fast and nimble. We see big opportunities coming—and intend to embrace them.