• Speeding Up B2B Payments: NACHA vs. Big Banks  
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Speeding Up B2B Payments: NACHA vs. Big Banks

The importance of NACHA (National Automated Clearing House Association) and its impact on speeding up B2B payments is not to be underestimated. Its responsibility in managing the administration, development, and governance of the ACH Network – the backbone for the electronic movement of money in the United States – makes it one of the most important players of the past, present, and future B2B evolutions in what has become a global marketplace.

What NACHA Does
The ACH Network serves as a network for consumer, business, and government payments, and NACHA is the not-for-profit association that governs this network and its transactional rules and regulations. The ACH Network moves nearly $39 trillion each year and handles over 33 billion financial transactions, and, for over 40 years, NACHA has been overseeing and facilitating the diversification and expansion of the electronic payments across this network.

NACHA works collaboratively with members of the ACH Network to establish a clear picture of responsibilities and roles in the transaction processes. Put simply, NACHA is dedicated to ensuring faster, smarter, and safer electronic payments while attempting to minimize risk for its users.

Speeding Up B2B Payments
Electronic payments, such as those enabled by NACHA, mean that transactions now have the potential to be completed without extra delays or extra trips to the bank to cash checks. It means that fund transfers are more secure, unexpected fees can be avoided, the payment process can be more transparent, and access to your own money is available as quickly as possible to use for whatever you need.

Indeed, this is NACHA’s vision – for speedy B2B payments to become the norm, not the exception. Writing in the American Banker, NACHA CEO Jan Estep quoted a “recent federal reserve study [which] found that 69% of consumer payers and 75% of business payees prefer instant or one-hour payment speed.” However, some large banks have in the past made moves to stall this process – even in 2012, big banks shot down a NACHA proposal to move away from the next-business-day settlement to same-day settlement.

Secure Vault Payments
But, there is now a call for a real-time payments system that will link all credit unions and U.S. banks by 2023, and NACHA is currently trying to build up a consensus that will start by making twice-a-day settlement possible, along the longer road to real-time settlements.

“NACHA has methodically collected and analyzed feedback on this approach from financial institutions, businesses, and payments service providers in an effort to identify a workable path forward in advance of formal rulemaking on same-day ACH. This step will help all parties to think carefully about the rules, tools, and technology that can help create a bridge from today’s payments to those of the future,” wrote Estep.

The technology is already in place to make this happen. Indeed, six years ago, NACHA implemented its so-called Secure Vault Payments (SVP) system, which enables real-time transfers 24/7/365. The problem is that not all banks or credit unions have adopted SVP, and the only way that proper change can ever be instilled in the economic ecosystem is when a more ubiquitous adoption is effected.

Dynamic Payments
The big banks, it seems, are worried about the complexity and the costs of implementing SVP and supporting same-day ACH, not to mention the potential for fraud. But this isn’t the case with the smaller community banks, who are actually in support of the proposals. This opens up an opportunity for other B2B businesses, such as Traxpay, who support the NACHA endeavour to move into the fold of hesitation as enabled by the decade-long timeline as imposed by the Federal Reserve.

Indeed, the Traxpay B2B Dynamic Payments Platform has been conceived to make a serious move away from the static payments processes that hinder the movement of funds and transparency of transactions throughout business networks. Just like the NACHA endeavours, the Traxpay Dynamic Payments platform aims to move real money in real time. What is more, it enables businesses to have control and transparency over their transactions by delivering the rich data that those businesses need to gain a competitive advantage.

The Traxpay Solution
Essentially, Dynamic Payments is a new model for secure electronic B2B payments that transforms the way that businesses pay and get paid. It combines secure digital banking with rich business data and modern cloud-based technologies to enable faster, safer, smarter B2B transactions. Using Traxpay, businesses gain real-time responsiveness to changing business conditions and can synchronize payments and data on-the-fly, with full track and trace visibility across the board, ensuring payments are executed and settled accordingly.

Dynamic payments offer an end-to-end solution for B2B transactions and represent a meaningful option for acceleration and simplification. It’s the move that makes sense to the NACHA initiative, and indeed offers a viable alternative to traditional static payment systems. Most big banks have struggled to keep pace with the change towards dynamic B2B payments and transactions, and so, those currently unmet consumer and corporate needs for faster, safer, smarter payments have likewise been stalled. Traxpay is pleased to offer a clear path forward, and to help drive the next big wave of innovation in commercial transactions.

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