US payment rails extend hours

The main payment rails in the US will be opened for longer as demand increases for real-time payments.

Speaking during The Bankers Association for Finance and Trade’s Virtual Payment conference, Michael Herd, Senior VP for ACH Network administration at NACHA, said: “We’ve been laser focused on faster payments dialog and specifically the expansion or extension of the same day ACH capability.”

Starting today (March 8) both Fedwire and the National Settlement Service (NSS) will extend their operating hours with the NSS operating until 6:30pm ET and Fedwire’s third party cut-off time and service will now close at 6:45pm and 7:00pm respectively.

From March 19, same day ACH transactions will be open for an additional two hours. Last year also saw the ACH same day limit raised from $25,000 to $100,000.

“The larger strategic aspiration is unambiguously 24/7 operation,” said Richard Dzina, executive VP of the financial services group at The Clearing House. “This will open access to new markets and support the dollar as a global reserve and settlement currency.

“The world in which we operate is no longer one that is constrained by geography or time and nonbank competition continues to accelerate, and barriers to entry continue to decline.”

Digital payments volumes have accelerated due to the pandemic. The ACH network recorded two billion more transactions in 2020 than in the previous year, the highest growth rate since 2007.

“The events of the last year from a payments perspective have really driven transactions to electronic and digital channels, and certainly many more have moved over to the ACH rails,” said Herd.

ISO 20022

As the pandemic accelerates the shift to electronic and digital payments, a global push for data standardisation has culminated in the upcoming adoption of ISO 20022.

“The information content associated with a payment message is as critical as the settlement value. Realising that value is absolutely dependent upon the harmonisation of message formats on the ISO 20022 standard,” said Dzina.

“[ISO 20022] is something that we’ve been having a lot of conversations about. There’s been a lot of focus around moving that ahead and working in lockstep with the rest of the industry,” said Dan DeLuca, senior VP and head of Fedwire Funds Service and NSS at the Federal Reserve Bank of New York.

However, the pandemic has delayed the implementation of the new standard. Fedwire has said there will be no message standard changes this year, while SWIFT also announced a year delay to their implementation of ISO 20022.

One payment network which is rolling out an ISO 20022 compatible system this year is Lynx, developed by Payments Canada. Andrew McFarlane, executive director of modernisation at Payments Canada said shifting international timelines and bank adoption remains a major hurdle to ISO 20022 adoption.

“One challenge is there is always this speculation within industry of “is [the date] going to move? Is it not going to move again?”

“The infrastructure changes are not huge for us, for ISO. The challenge is really with our member banks and the ingesting of that extra ISO data. How they’re going to then make it available to the end consumer?”

For Dizna, better collaboration globally will be key in addressing not only ISO standardisation but the other challenges facing the payments sector.

“Whether it be contemplating extending hours, advancing ISO or advancing cross border interests, they all tap on the same resources. Choreography across those initiatives is going to be key, if we’re going to realise the ultimate ambitions of each one.”