As a payment
system that universally connects all U.S. bank accounts, the ACH Network
supports a tremendous amount of transactions. Between Same Day ACH and core ACH
payments, the transaction volume on the ACH rails has been steadily rising.

To learn more
about the ACH Network’s growth, and to better understand the difference between
faster payments, real-time payments, and Same Day ACH, PaymentsJournal sat down
with Michael Herd, senior vice president of ACH Network Administration at
Nacha.

Joining us in
the conversation was Sarah Grotta, director of the Debit and Alternative
Products Advisory Service at Mercator Advisory Group.

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Defining the difference between payment
types

Before delving
into the growth of the ACH Network, Herd and Grotta began by explaining the
differences between faster payments, real-time payments, and Same Day ACH. Too
often, the media and public use these terms interchangeably, leading to confusion.

“Same Day ACH
is the easiest to define and understand because it is an ACH payment that
settles on the same day that it is initiated,” began Herd. In contrast, the
typical ACH payment—sometimes referred to as core ACH—would settle on the next
day or even two days after being initiated.

Defining faster
payments proves to be a little harder because it’s a general term that can
encompass a lot of different payment types. Herd described how faster payments
can be understood in three ways. First, and in the broadest sense, “faster
payments can be anything that’s faster than a paper check,” he explained.

Second, faster
payments can refer to a method that has accelerated processing in an existing
payment system. A prime example of this is Same Day ACH because it is processed
quicker than its traditional counterpart.

Finally, faster
payments could refer to an entirely new payment type that did not exist a few
years ago. For example, Zelle would be fit this definition, as would Same Day
ACH.

Herd described
that because of these differing definitions, faster payments “can be a term
that means different things in different contexts, and this can be confusing.”

Real-time
payments can also be confusing because it can refer to two different things.
One is the payment rail run by The Clearing House, known as the RTP network
(for Real-Time Payments). This is distinct from the generic term that refer...