What’s the future of ACH?
Technologies as ubiquitous as ACH have many stakeholders, which means that changes, when they come, tend to happen slowly. Still, some innovators are renovating ACH; some are building on top of it, and some are building alternative systems altogether.
Same-day ACH: Nacha has been pushing for same-day ACH capabilities for years. The system finally launched in 2016 and has increased in usage each year. In 2022, same-day ACH limits were raised to $1 million per transaction, which is likely to continue to increase ACH usage.
Better security: ACH solutions such as Plaid Signal bypass the historical pitfalls of the ACH system, making it a more attractive tool for ecommerce and other business uses. For example, many investment apps and cryptocurrency platforms now use ACH for account funding and USD withdrawals, and services like Venmo and CashApp use it for peer-to-peer money transfers.
Growing competition: Other money transfer solutions are competing with ACH, including Real Time Payments, which allow consumers to transfer money instantly. The Federal Reserve is also releasing its own real-time product, FedNow. This increase in competition could bring more changes to the ACH process.
Asked about the future of ACH, Plaid product lead Ajay Andrews said: “We’re excited to grow the adoption of ACH by building new features that accelerate onboarding, lower return rates and simplify liquidity management while preserving the low costs of ACH solutions.” He also added that “we are constantly adding support for new use cases, where Plaid abstracts the money movement complexity so that customers can focus on their core consumer value”
The larger ACH ecosystem also stands to benefit from the continued migration from paper checks, which still make up 21 percent of overall US payment volume by dollars. Meanwhile, we’ll see further development of real-time products from traditional banks, the Federal Reserve, and crypto startups. For consumers, the resulting competition for market share is likely to result in lower costs, faster transfers, and more choices.
