At a recent seminar, we were told that electronic deposits are subject to next-day availability, as with cash deposits and wire transfers. Our bank’s person-to-person (transfers between customers and recipients at other banks) and bank-to-bank transfers (transfers to an account held by the same customer at another bank) are processed as ACH debit transfers, and we place a one-day hold on such transfers before making the funds available to our customers. Are these electronic payments that would be subject to next-day availability?

ACH Debit Transfers

No, ACH debit transfers are not “electronic payments” for purposes of Regulation CC’s next-day availability requirements. In Regulation CC, an “electronic payment” includes ACH credit transfers, but not debit transfers. As explained in the Official Interpretations to Regulation CC, because an ACH debit transfer is more like a check than an ACH credit transfer — for example, ACH debit transfers are subject to the receiver’s right to return — it is not subject to next-day availability.

ACH Credit Transfers

On the other hand, should these transfers be processed as ACH credit transfers, Regulation E’s next-day availability requirements would apply. Electronic payments such as ACH credit transfers must be “available for withdrawal not later than the business day after the banking day on which the bank received the electronic payment.” A “banking day” is a day on which your bank is open for business, and a “business day” is weekday other than federal banking holidays.

A payment is considered “received” when your bank receives “actually and finally collected funds” from the other bank. In the context of an ACH credit transfer, the Regulation CC Official Interpretations explain that payments are received when the transferred funds are posted to your bank’s account. Consequently, we believe that Regulation E would permit a bank to impose a one-day hold before making funds available to customers without violating Regulation CC, provided that the customer receives the funds on the next business day after your bank receives the transferred funds.

We do recommend reviewing other potentially applicable requirements, such as NACHA’s Same Day ACH rules, which may impose expedited availability requirements for ACH debit or credit transfers.

For resources related to our guidance, please see:

Regulation CC, 12 CFR 229.10(b) (“(1) A bank shall make funds received for deposit in an account by an electronic payment available for withdrawal not later than the business day after the banking day on which the bank received the electronic payment.”)

Regulation CC, 12 CFR 229.2(p) (“Electronic payment means a wire transfer or an ACH credit transfer.”)

Regulation CC, Official Interpretations, Paragraph 2(p), Comment 2 (“ACH debit transfers, even though they may be transmitted electronically, are not defined as electronic payments because the receiver of an ACH debit transfer has the right to return the transfer, which would reverse the credit given to the originator. Thus, ACH debit transfers are more like checks than wire transfers. Further, bank customers that receive funds by originating ACH debit transfers are primarily large corporations, which generally would be able to negotiate with their banks for prompt availability.”)

Regulation CC, Official Interpretations, Paragraph 10(b), Comment 4 (“The availability requirements of this regulation do not preempt or invalidate other rules, regulations, or agreements which require funds to be made available on a more prompt basis. For example, the next-day availability requirement for ACH credits in this section does not preempt ACH association rules and Treasury regulations (31 CFR part 210), which provide that the proceeds of these credit payments be available to the recipient for withdrawal on the day the bank receives the funds.”)

Regulation CC, 12 CFR 229.2(p) (“Business day means a calendar day other than a Saturday or a Sunday, January 1, the third Monday in January, the third Monday in February, the last Monday in May, July 4, the first Monday in September, the second Monday in October, November 11, the fourth Thursday in November, or December 25. If January 1, July 4, November 11, or December 25 fall on a Sunday, the next Monday is not a business day.”)

Regulation CC, 12 CFR 229.2(p) (“Banking day means that part of any business day on which an office of a bank is open to the public for carrying on substantially all of its banking functions.”)

Regulation CC, 12 CFR 229.10(b) (“(2) When an electronic payment is received. An electronic payment is received when the bank receiving the payment has received both (i) Payment in actually and finally collected funds; and (ii) Information on the account and amount to be credited. A bank receives an electronic payment only to the extent that the bank has received payment in actually and finally collected funds.”)

Regulation CC, Official Interpretations, Paragraph 10(b), Comment 2 (“Finally collected funds generally are received for an ACH credit transfer when they are posted to the receiving bank’s account on the settlement day. In certain cases, the bank receiving ACH credit payments will not receive the specific payment instructions indicating which accounts to credit until after settlement day. In these cases, the payments are not considered received until the information on the account and amount to be credited is received.”)

NACHA, Same Day ACH (Phase 2) (“Significant use cases for Same Day ACH include: . . . Account-to-account transfers, providing faster crediting for consumers who move money among various accounts they own.”)

NACHA, Same Day ACH (Phase 2) (“Beginning September 15, 2017, Same Day ACH is available for debit entries, enabling the same-day processing of virtually any ACH payment. . . . Originating financial institutions (ODFIs) are able to submit files of same-day ACH payments through two additional clearing windows provided by the ACH Operators (Note: The actual ACH Operator schedules are not determined by the NACHA Operating Rules.):

A morning submission deadline at 10:30 AM ET, with settlement occurring at 1:00 PM.

An afternoon submission deadline at 2:45 PM ET, with settlement occurring at 5:00 PM.

Virtually all types of ACH payments, including both credits and debits, are eligible for same-day processing.”)