Phase 2 of ACH Brings Opportunities to Streamline Payments, Bolster Cybersecurity

By Luis Rojas

 The second phase of NACHA’s same-day ACH rule is now upon us, enabling same-day processing of virtually any ACH payment. With this change, effective Sept. 15, NACHA predicts that same-day ACH transaction volume may rise to over 1.5 billion annual transaction over the coming decade. Financial institutions need to use this milestone as an opportunity to review their payment and fraud investigations processes and ensure they are up to speed and providing customers with a positive user experience while controlling their risk.

For banks, the importance of delivering a seamless experience for payments processes to clients is highlighted in a recent survey sponsored by Bottomline Technologies, showing that 45 percent of corporates see a bank’s B2B payables offerings as being a very important or extremely important factor in the bank selection process.

At Bottomline Technologies, we have been working with our clients to ensure their processes are streamlined, and that they can seamlessly operate under the same-day ACH rules. Despite this, there is still nervousness throughout the industry that the volume and speed of transactions under the new same-day ACH regulations may allow for fraudsters to take advantage.  Debit transactions have typically been more prone to higher return rates, and the faster cycle of Same Day ACH phase II will only increase that risk.

Many believe that with quicker payments comes quicker fraud, and this comes at a time when 46 percent of corporates’ payment security concerns are either higher or significantly higher than last year, compared to just 2 percent who have lower security concerns[1]. It will be more important than ever to verify account status related to same day ACH transactions especially for service providers that have significant volumes of customer-initiated debit payments such as utilities or other vendors that generate recurring bill pay transactions.

Beyond fraud concerns, there are several other motivations for financial institutions to use this opportunity to review their payments processes, including revenue protection, compliance management, and labor costs associated with the new requirements. Similarly, organizations should view same-day ACH as an opportunity to provide, pack and price new same-day ACH solutions to deliver a clear point of differentiation in a highly competitive environment.

So, what steps should financial institutions take to prepare themselves and improve the payment experience?

Firstly, streamlining the online payments process should be a priority. By integrating digital banking and payments platforms, organizations can position themselves to handle the shorter deadlines and volumes associated with the new environment, while improving the customer experience.

Secondly, financial institutions must ensure their fraud detection systems and operational processes are set up to manage same-day investigations. Traditional log-file based solutions are generally not up to the task and can bring investigations to a standstill by generating an excessive amount of false positives, resulting in frozen payments and frustrated customers. To streamline investigations, organizations should make sure they’re using fraud protection that leverages real-time behavior monitoring. A system that analyzes a user’s behavior based on their own historical patterns will be far more successful at allowing safe payments to flow freely while stopping fraudulent payments before they happen.

The implementation of the second phase of same-day ACH is an ideal time for financial institutions to step back and look at how they improve their payment processes to both minimize the new risks associated with same-day payments and take advantage of opportunities to improve customer experience.


NOTE: Author Luis Rojas is vice president of product management, cyber fraud and risk management for Bottomline Technologies.

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