ACH Rose to the Federal Stimulus Challenge

The distribution of stimulus payments caused a lot of problems this year. So how did ACH stack up in the processing of these payments?

The CARES Act was a government stimulus in response to the shutdowns caused by the COVID-19 shutdowns that sent out $270 billion in payments to Americans. Some individuals received their payments in the spring, and others had trouble receiving those funds, which were all finally disbursed by the end of August.

ACH is More Important than Ever

94% of Americans are choosing Direct Deposit for receiving paychecks, according to a recent American Payroll Association (APA) survey. And 5%of them have reported choosing to switch to Direct Deposit because of the events surrounding the coronavirus pandemic.

The ease of use and ability for many Direct Deposit users to split their deposits between different bank accounts has been a great relief for many, allowing them to focus more on how to manage their funds rather than trying to figure out how to get the funds into those personal financial accounts.

ACH is the perfect counterpart to payment transfer services like PayPal, Venmo, etc. because it allows for that same quick and easy management of funds. And because of these benefits, ACH use and popularity has been continually on the rise.

Payment Processes and Their Role in Distributing Federal Stimulus

Old technology and lack of adequate staff were the first roadblocks to getting this massive stimulus payment relief to citizens.

Paper checks were sent out in the spring and some people received them in April, while others had to wait until August to receive them in the mail. As a form of payment distribution, paper checks are easily lost and can take more time to be processed into an individual’s account.

Many people received prepaid debit cards with their stimulus payments, mistook them for junk mail, and threw them in the trash.

Others received notices that their funds had been delivered, but when they checked their accounts, the deposits weren’t there.

ACH’s Effectiveness in Delivering Stimulus Payments

There were many issues with getting those stimulus payments into the hands, and bank accounts, of those who needed them.

As a great testament to its effectiveness, there were no issues for those who were able to have their stimulus payments Direct Deposited. “The IRS said that payday for Direct Deposit was to be April 15. And on the morning of April 15, citizens woke up and found the money available for their use, just as intended,” reports Jane Larimer, the CEO of NACHA.

ACH is not just a fair-weather solution, it is a vital tool in our everyday handling of finances, whether you run a corporation, a small business, or are just taking care of your family’s bills and needs.

Thinking of switching up your payment systems? ReliaFund can help you tailor ACH processing software and other powerful features to create payment flexibility for your business. Contact us to learn more.