UPDATE: April 6, 2021: Nacha recently announced its plans to increase the same day ACH transfer limit from $100,000 to $1 million, effective March 18, 2022.

The move comes in as Nacha experienced ACH transfer records in 2020, despite the pandemic. In March, Nacha also extended operating hours for processing transactions from 2:45 PM EST to 4:45 PM EST to minimize impacts on financial institutions' end-of-day operations and the re-opening of the next banking day.

"Nacha has made a significant enhancement to Same Day ACH every year since it was introduced in 2016," said Jane Larimer, Nacha President and CEO, in a press release. "This enhancement reflects our commitment to see that the modern ACH Network meets the nation's needs for fast and efficient payments."  

The increased limit will be beneficial for many types of payments, from insurance claim payments and payroll funding, to business-to-business and tax payments, and other payment types. 

Last month, Nacha enacted its WEB debit rule, as rising ACH transactions were also prone to fraudulent activities. 

Dive Brief:

• Automated Clearing House (ACH) payments smashed records in 2020, increasing by 8.2% to 28.6 billion transactions, Nacha, the organization which governs the ACH network, said. 
• The organization expects rapid expansion will continue, post-pandemic. The impact of COVID-19 has accelerated electronic payments adoption, helping fuel ACH growth. 
• Big stimulus payments more than offset the drag from high unemployment. ACH is the primary source through which stimulus payments are being made.

Dive Insight:

Payments made through ACH soared to record levels in 2020, driven in largely by last year's Coronavirus Aid, Relief, and Economic Security (CARES) Act. The law provided up to $1,200 per adult, depending on household income, and $500 per child, up to $3,400 for a family of four. The subsequent Coronavirus Response and Relief Supplemental Appropriations Act authorized additional payments, up to $600 per adult and $600 per child. 

In addition to these payments, COVID helped fuel ACH growth as consumers became more comfortable making purchases online. ACH payments for online e-commerce soared by 15% to 7.7 billion transactions.

"Typically ACH volumes decrease in times of high unemployment and a slowdown in economic activity," said Nacha Senior Vice President Mike Herd. "But COVID caused a rapid expansion in adoption of electronic payments generally, which more than offset the effects of a disrupted economy."

Last year, ACH processed a record 26.8 billion transactions, the equivalent of 81 payments per U.S. citizen. It was the first time transaction volume on the ACH network jumped by more than two billion from one year to the next. Transaction volume rose 8.2% in 2020 compared to 2019; transaction value surged by 10.8% to $61.9 trillion.

Herd points out that distribution of stimulus payments by check turned out to be quite problematic, prompting the federal government to make moves to more aggressively adopt electronic payments. Should the Biden administration's $1.9 trillion COVID relief package become law, ACH stands to continue gaining.

And if the economy revs up this year following the COVID slowdown, as many economists expect it will, ACH would benefit from the continuing federal stimulus as well as stronger economic growth.

Five years ago, Nacha introduced same-day ACH payment. This option was turbocharged last year when the maximum allowed payment size was quadrupled to $100,000 per transaction. The effect of the raised limit on same day payments was almost immediate, Herd says, with the average size per transaction jumping 40% in just one month.

Nacha is looking to increase the maximum size of same-day ACH even more. The non-profit put out a request for comment on the idea of further increasing the same-day maximum, generating over 100 responses.

Herd is hopeful that an increase can be approved in the first half of 2021, and go into effect in 2022.