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SDA Dollar Limit Increase: What This Means for You

Amy Donaghue

By: Karen Sylvester, AAP, APRP, CAMS, CRCM, NCP, Director, Compliance Education

On March 18th the Same Day ACH dollar limit will be increased to $1 million per payment. This Rule will continue to expand the capabilities of Same Day ACH and is expected to improve Same Day ACH use cases and contribute to additional adoption. Let’s talk about the overall benefits of this increase, how Nacha will enforce this new Rule and how this could impact your organization.

The Benefits of Increasing the Dollar Limit

Increasing the Same Day ACH dollar limit is a frequently requested change by ACH end-users. In fact, a summer 2020 survey of corporate ACH end-users resulted in the following recommendations for Same Day ACH:

  • Increase or remove dollar limits
  • Expand processing hours and days

Additionally, the initial dollar limit increase in March 2020 (increasing the per-transaction dollar limit from $25,000 to $100,000) had an immediate positive impact on Same Day ACH usage. After this initial increase, the average amount of a Same Day ACH payment increased by 46% from February to April 2020 and overall Same Day ACH dollar volume increased by an astonishing 86% in 2020.

This Rule will apply to all Same Day ACH entries, including consumer payments and business payments, both credits and debits. It is also anticipated to contribute to ongoing adoption of Same Day ACH and existing use cases are projected to improve by making a greater percentage of payments eligible for Same Day ACH, including:

  • Business-to-business payments
  • Tax payments
  • Payroll funding
  • Insurance claim payments
  • Merchant settlement
  • Same Day Reversals of standard ACH payments
  • Business continuity, including recovery from missed deadlines or outages

This increase will also result in the percentage of ACH dollars eligible for Same Day more than doubling, and an additional 3.5% of B2B payments will become eligible for Same Day ACH as well.

Enforcement

It is possible your organization will have Originators who want to send more than $1 million as a Same Day ACH entry. Simply put – this is not allowed.

ACH Operators will edit for the $1 million limit for Same Day ACH transactions and will assign next-day settlement to any transactions above the limit. The limit on large-dollar transactions (ACH Entries over $1 million) applies to individual transactions, meaning a single Same Day ACH transaction cannot be for more than $1 million. There is no similar limit on the aggregate value of a batch of Same Day ACH transactions, or a file of Same Day ACH transactions. Entries submitted in a same-day processing window that are over $1 million will not be rejected by the ACH Operator but will be processed for next-day settlement in the next available processing window.

As with previous dollar limits, transactions are forbidden from being restructured to evade the $1 million limit. For example, if a business has a loan payment of $1.5 million due, that payment would not be eligible for Same Day ACH and should not be divided and sent as multiple same-day Entries (such as two $750,000 payments) to avoid the per-transaction dollar limit. However, if a business is paying multiple invoices from the same supplier that each amount to $1 million or less, each invoice could be paid using a distinct Same Day ACH transaction.

Organizations must make it a priority to ensure Originators are educated on the dos and don’ts of sending Same Day ACH Transactions. Originators should be educated to avoid attempts at structuring Entries to evade the per-transaction dollar limit. Because evasion can be a very fact-specific inquiry, Nacha will consider evasion issues on a case-by-case basis.

How This Impacts Your Organization

A dollar limit increase would result in a larger amount of dollars settling at several times throughout the day, including 1:00 PM, 5:00 PM and 6:00 PM ET. All ACH participants must prepare and plan for these transactions. ODFIs also need to determine whether to offer higher dollar limits to Same Day ACH Originators, which may impact a financial institution’s assessment of its clients’ credit risks.

Source: Nacha

Want to Learn More About Upcoming ACH Rules Changes?

The Same Day ACH dollar limit increase isn’t the only Rules change happening in 2022. Many significant changes are set to impact the payments industry this year and beyond! Join us for our one-day, in-person Payment Systems Update to learn what you need to know to prioritize your organization's plan of action and maintain compliance with the ever-changing rules and regulatory landscape. This year's in-person update covers roles and new responsibilities for Third-Party Senders, Same Day ACH Rule changes, updates to the meaningful modernization and other ACH Rules changes, CFPB FAQs regarding Regulation E and more. Register now! For those not able to attend in person, there is an abbreviated virtual update available.