Money & Business

What the Future of ACH Means for Associations

By / Nov 13, 2017 (DigitalVision/Getty Images Plus)

In recent years, the underlying technology used for direct-deposit transactions has slowly become more “instant,” and now allows for same-day transactions. The electronic payments association NACHA is making the case that nonprofits could benefit from this shift.

The traditional ACH (automated clearing house) payment is getting faster, and that could have a lot of benefits for associations and nonprofits.

To put it another way: It could just make Giving Tuesday a little bit greener.

Over the past couple of years, NACHA—The Electronic Payments Association has been working to roll out the payment format, which (as its name suggests) pushes money to accounts without a long delay.

The industry put same-day ACH (SDA) into effect for credit transactions last year and for debit transactions in September.

NACHA, per its recent Same Day ACH Use and Demand Study conducted in tandem with the financial technology news outlet PYMNTS.com, estimates that three-quarters of financial institutions will offer same-day ACH to business customers by the end of 2018, up from 43 percent today.

The rollout of same-day ACH to consumer markets is going a bit slower, but the effort suggests that attempts to encourage near-real-time financial transactions are gaining traction.

“Our initial findings show that overall adoption of SDA products has been quite strong, especially given that the availability of these products has just seen its first anniversary,” the report stated.

The benefits of same-day ACH credit (in which money is pushed to another account) are apparent in a business context—say, when a payment to a contractor needs to be sent quickly. But NACHA is also making the case that nonprofits could benefit from same-day ACH debits, which pull money from another account.

Recently, the association conducted two other studies targeted at donations to nonprofits. The research, conducted by ConsumerQuest, found that donors who used direct ACH payments gave more than twice as much as donors that used other means such as check or payment card—a difference of $1,700 to $650 over 12 months. The research went on to note that payment cards were more likely to be reissued because of fraud concerns, leading to payment disruptions, and that ACH payments tended to have smaller fees on the whole compared with credit card transactions.

Priscilla Holland, the senior director of healthcare and industry verticals for NACHA, said in an emailed statement to Associations Now that the updated standard had specific value for associations and nonprofits that rely on recurring payments, whether for charitable donations or for member renewals.

“Same-Day ACH, as a faster payments option, helps meet the growing demand to move money and information more quickly. Yet the benefits of ACH to nonprofits don’t end there. ACH donors give more often, and in higher volume and value, than other donors, increasing your income,” she said in her statement. “In addition, as the gold standard of recurring payments, direct withdrawal via ACH automates funds collection for everything from membership renewals to monthly donations, saving you time and money.”

Curious to learn more? NACHA has an online toolkit for sustaining donor programs on its website.

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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