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:
- Review what an ACH transfer is
- Provide the timelines for standard ACH transfers and redeeming Sila
- Identify why ACH transfers are not instant
- And document the steps involved in an ACH transfer
What is an ACH Transfer?
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 For example, an ACH debit transaction will mean that money is withdrawn from a bank account.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.
Standard ACH Transfer Timelines
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.
Standard ACH Debit
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:
- On Monday: A user requests an ACH debit.
- Tuesday: Funds leave the other bank on Tuesday morning.
- Wednesday: The RDFI has 48 hours—until Thursday morning—to report a return code. This gives Sila enough time to wait for return codes and then process the ACH payment.
- By Thursday: The funds are settled by 4 PM and Sila tokens are issued at that time.
Standard ACH Credit
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:
- On Saturday, a user requests an ACH credit with the Originating Depository Financial Institution (ODFI).
- Since banks will not process an ACH payment on a Saturday or Sunday, the request is considered to be made on Monday. Requests submitted on Sunday are also submitted by the bank on Monday.
- Monday, the bank submits the request.
- Tuesday: Funds leave the other bank on Tuesday morning.
- Wednesday: The RDFI has 48 hours—until Thursday morning—to report a return code. This gives Sila enough time to wait for return codes and then process the ACH payment.
- By Thursday, the funds are settled by 4 PM and Sila tokens are issued at that time.
Expediting ACH Transfers: Same Day ACH Transactions
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:
- 10:30 AM ET, with settlement occurring at 1 PM
- 2:45 PM ET, with settlement occurring at 5 PM
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.
Sila Timelines
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.
ACH Debit Requests: Sending Sila
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.:
Monday
- Funds leave the other bank on Tuesday morning
- Funds are settled by Thursday at 4 PM
- Sila tokens are issued at that time
Tuesday
- Funds leave the other bank on Wednesday morning
- Funds are settled by Friday at 4 PM
- Sila tokens are issued at that time
Wednesday
- Funds leave the other bank on Thursday morning
- Funds are settled by Monday at 4 PM
- Sila tokens are issued at that time
Thursday
- Funds leave the other bank on Friday morning
- Funds are settled by Tuesday at 4 PM
- Sila tokens are issued at that time
Friday
- Funds leave the other bank on Monday morning
- Funds are settled by Wednesday at 4 PM
- Sila tokens are issued at that time
Saturday
- Funds leave the other bank on Tuesday morning
- Funds are settled by Thursday at 4 PM
- Sila tokens are issued at that time
Sunday
- Funds leave the other bank on Tuesday morning
- Funds are settled by Thursday at 4 PM
- Sila tokens are issued at that time
ACH Credit Request: Redeeming Sila
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:
- Monday: funds show up at the other bank on Tuesday
- Tuesday: funds show up at the other bank on Wednesday
- Wednesday: funds show up at the other bank on Thursday
- Thursday: funds show up at the other bank on Friday
- Friday: funds show up at the other bank on Tuesday
- Saturday: funds show up at the other bank on Tuesday
- Sunday: funds show up at the other bank on Tuesday
Sila and Banking Holidays
Unlike other national banks, Sila will handle ACH requests made by 5:45 PM PST on every Federal Holiday, except Christmas Day:
- January 1, 2020, New Year’s Day
- January 20, 2020, Martin Luther King Jr. Day
- February 17, 2020, Presidents’ Day
- May 25, 2020, Memorial Day
- July 4, 2020, Independence Day
- September 7, 2020, Labor Day
- October 12, 2020, Columbus Day
- November 11, 2019, Veterans Day
- November 26, 2019, Thanksgiving Day
- January 1, 2021, New Year’s Day
Sila will not handle any ACH requests received on the Federal Holiday listed below:
- December 25, 2020, Christmas Day
Reasons an ACH Transfer is Not an Instant Transfer of Funds
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.
Federal Reserve Processing Times
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.
Security Measures in an ACH Payment
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.
Steps Involved in an ACH Transfer
ACH payment processing usually involves five steps. The most common example is a direct deposit.
Here’s how it works:
- An employee authorizes a company to deposit their salary, bonuses, and any other income into a designed bank account. The employee provides a bank account number, routing number, and institution number.
- The company enters the bank account information into their banking or paying system. In this scenario, the company is known as the Originator as they are where the money is coming (or originating) from.
- The company will submit a request with their bank in order to submit an ACH credit. The bank in this scenario is known as the Originating Depository Financial Institution (ODFI). The ODFI receives the payment files and makes electronic ACH entries for all the ACH entries that they received that day.
- These entries are sent to the ACH Operator, who then sorts through the entries to verify the corresponding financial information.
- The request is then submitted to the Receiving Depository Financial Institutions (RDFI), who has 48 hours to look for any reason for why this ACH transaction won’t work.
- Once the processing has been completed, and it usually takes about 3-4 business days, on the whole, the employee will receive the money that they are owed. In this scenario, the employee is known as the Receiver.
ACH Transfers with Sila
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.