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The Sila API allows users to send money transfers electronically via ACH transfers and the Sila token. Unfortunately, for most people who use ACH transfers to make a payment, sending and receiving money is not instantaneous.
Instead, it may take a few days for the money to be processed and deposited.
Sila can open up doors to accessing funds while still abiding by the timelines set by Nacha and the ACH Network.
Identifying how long it takes for an ACH transfer to be completed is essential to our daily lives. We need to be able to stay on track of when money is leaving or entering our account so that we can provide accurate assessments in other parts of our lives.
To help you get an idea of the timeframe for ACH transfers, this article will:
An ACH transfer is a bank-to-bank money transfer that is completed using the ACH Network in the U.S. The Automated Clearing House (ACH) Network ensures that all bank-to-bank transfers are completed seamlessly, that the money is processed quickly, and confirms that the transfer is not fraudulent activity.
The ACH Network is administered by and operates based on guidelines established by the National Automated Clearing House Association (Nacha), a group that dates back to 1974. The network is comprised of ACH Operators, which consists of The Clearing House, the Federal Reserve, and the operating financial institutions.
ACH transfers can operate as an ACH debit and an ACH credit, it just depends on the type of transaction. For example, an ACH debit transaction will mean that money is withdrawn from a bank account. An example of this is bill payment through an online banking portal.
An ACH credit occurs when money is deposited into a bank account. An example of this is when a payment is deposited in your bank account.
The length of time for an ACH transfer to be completed will depend on several factors. First, each financial institution will normally process an ACH payment in batches. Therefore, if your bank submits only one batch of Entries at the end of the day, then your ACH transfer is delayed already by one day.
ACH transactions with Sila are separated into three categories: an ACH withdrawal that is sent through the ACH Network, and ACH Credit that is sent through the ACH Network, and an ACH withdrawal from a Sila account to a private receiving account.
A standard ACH debit will take about 3-4 business days in order for the transfer to be completed.
The first day is when the transfer is initiated. Then, the Receiving Depository Financial Institutions (RDFI) has 48 hours from the time the ACH transaction was originated in order to notify Sila of any return codes. After the third day, if no return codes are pulled, then the funds associated with the ACH debit can be issued to the Receiver.
Here is a Sila example:
In every ACH transaction, someone is debiting (sending) money and someone is receiving money (credit). Therefore, it is easy to understand the timelines for a standard ACH credit if you reverse the processes for the ACH Debit.
So, for example, when requesting a credit, the request is sent out at batch times to streamline bank processing. The RDFI still has 48 hours to report any return codes.
The ACH credit is issued at the latest by the end of the day on the 4th business day.
Note that for the most part, all these timelines operate around bank days. So, an ACH transaction requested over the weekend will be delayed at least one day.
Here is an example of receiving an ACH credit on a weekend:
Because of the popularity and demand of ACH transfers, Nacha introduced same-day ACH transactions. By expediting processing, ACH transfers could more effectively compete with the fast processing timelines of a wire transfer.
This allows banks to make more than one ACH request per day (up to two, in batches) and it expedites the time between a user submitting an ACH request and the processing time of the financial institution.
Here’s an overview of same-day ACH transactions:
In 2016, Nacha rolled out same day ACH processing. This not only improved the quality of the ACH Network, but it also reduced the incidence of returned entries and the associated financial costs of the ACH Network.
Same day ACH transactions open up processing times so entries submitted using same day entries will entitle the recipient to receive those funds that day.
ODFIs will be able to submit same day ACH payments through two clearing windows:
RDFIs are required to receive same day ACH payments and they will be mandated to make funds available from same day ACH credits to the depositors by 5 PM at the RDFI’s local time.
Virtually all ACH transactions (99% of the current ACH volume), including both ACH credits and ACH debits, are eligible for this type of processing. International transactions (IATs) and transactions above $25,000 are not eligible.
All our Sila timelines are dictated by the ACH Network processing timelines.
Here is a breakdown of standard ACH debit request timelines, and timelines for redeeming Sila tokens.
For the most part, all ACH debit requests received by 4 PM will be processed in line with the ACH Network’s standard processing timelines. Here is the breakdown for how long it’ll take for the ACH transaction to be processed.
Note that these are timelines associated with the /Issue_sila endpoint and all times are Pacific Standard (PST) in the U.S.:
Redeeming Sila is initiated by the /Redeem_sila endpoint. All times listed below are in Pacific Standard (PST) in the U.S.
All ACH Credit requests received by 5:45 PM EST will be deposited based on the following timelines:
Unlike other national banks, Sila will handle ACH requests made by 5:45 PM PST on every Federal Holiday, except Christmas Day:
Sila will not handle any ACH requests received on the Federal Holiday listed below:
It’s true—ACH transfers do not immediately land in the recipient’s account. This concept may seem odd for us since we are used to operating on expedited timelines. However, waiting for an ACH transaction to be processed is the smart thing to do.
One of the best ways to understand why an ACH transfer takes time is to look at return codes. Return codes are a set of three character codes that inform the financial institution who requested the ACH payment (the Originating Depository Financial Institution or ODFI) of the reason for why an ACH transaction failed. Return codes might pull up that a bank account is no longer active, or that the funds that they attempted to pull were insufficient.
Not all of these return codes are instantaneous as, according to Nacha’s Operating Rules, RDFIs have 48 hours to submit a return code. This is largely because of the high volume of ACH transfers that a financial institution might experience in a single day. Banks need the time to verify the individual details associated with each transaction.
Add all this up to the fact that the ACH network operates along with business day timelines and it becomes clearer as to why these transactions can take time.
In addition to processing times allotted for ODFIs and RDFIs, the Federal Reserve has its own processing time.
You can access the FedACH Processing schedule here.
ACH transfers are regulated so strongly by the ACH Network because ACH fraud is very common and easy to execute, especially with the prevalence of online banking.
Malicious attackers only need two pieces of information to pull money out of an account: a checking account number and a bank routing number. Email phishing scams are usually the most common way to obtain this information.
Since targeted ACH fraud attacks can be so devastating, financial institutions typically set up protective measures around unauthorized ACH transaction requests. The two most common safety measures are an ACH Debit Block and an ACH Debit Filter:
ACH Debit Block: A service that auto-returns ACH debits and/or credits directed at a specific bank account.
ACH Debit Filter: A service that auto-returns all ACH items for a designated account unless the ACH item was pre-authorized.
Make sure to inquire with your financial institution so you understand the security measures that can be applied to your bank account to protect against malicious attackers.
ACH payment processing usually involves five steps. The most common example is a direct deposit.
Here’s how it works:
While it seems simple to request a bank-to-bank transfer, the transaction must be passed through several institutions to verify that the information provided is accurate.
If this information was not verified, then sending money could become more hazardous.
Luckily, Sila abides by the Operating Rules of Nacha and aims to speed up these processing timelines so that money transfers are not only secure but that they also arrive in a more timely manner.