The Federal Reserve’s changes to its FedACH® Services, which went into effect on September 23, 2016, may affect when you receive the funds for your paycheck.
The Fed’s new rule is adopted in support of the Same Day ACH Rule implemented by National Automated Clearing House Association (NACHA), an entity that sets the guidelines for financial institutions and other participants who use the Automatic Clearing House (ACH) network. This network is responsible for “moving money and information from one bank account to another through Direct Deposit and Direct Payment via ACH transactions.”
What’s the Story?
The Same Day ACH Rule allows financial institutions who “originate” ACH transactions to send the data files containing the payment information on the same day that the funds are supposed to arrive in the receiving financial institution’s members’ accounts.
To better understand how this affects the timing of your paycheck, refer to the chart below.
From an employee’s perspective, your employer’s payroll processor’s financial institution is the Sender of your paycheck. The credit union or bank where your payroll direct deposit will be received is the Recipient.
Before the Same Day ACH rule, Senders were required to send the payroll data to the Recipients at least two business days prior to the effective payday. With the Same Day ACH rule, the Senders can now send the payroll data to the Recipient on the same day as the effective payday.
This means if you’re used to receiving the funds for your paycheck a day or two ahead of your effective payday, this early access privilege may go away. The control of the timing is in the hands of the Sender—your employer’s payroll processor’s financial institution.
Federal government employees won’t be impacted for the time being, since the Fed is implementing the Same Day ACH Rule in phases.
For private companies, however, their payroll processor’s financial institutions will have the option to send the payroll file on the same day as the effective payday for a fee. It will be up to each of the originating financial institutions to determine when to send the payroll data to the receiving institution. The good news is the rule doesn’t give permission to send payroll date past the effective payday.
If you’re used to receiving your paycheck ahead of your actual payday, and have set up automatic bill payments or transfers to draw money from your account before your actual payday, the delay could cause your account to overdraw. We suggest updating these transactions to draw funds on or after your payday to minimize the chances of overdrawing your account.
Whom should I contact if I’m affected?
How this rule impacts consumers at large remains to be seen. If you do notice delays in your payroll direct deposit, please first consult your Human Resources or Payroll department.