Next Day ACH - Funds Moving Faster

Next Day ACH - Funds Moving Faster

At a foundational level, the Dwolla Platform is best utilized when moving money within the U.S. Banking System. As applications become more complex and cater to increasingly wider audiences, the one thing that hasn’t changed all that much is the methods of moving funds. Understanding how Dwolla utilizes ACH to move funds for businesses can help you understand how to better utilize the platform to ensure your application is up to the standards that your end users expect.

How Funds Move With Dwolla

Let’s imagine a peer-to-peer application where one Customer sends funds to another. While one Customer will see a debit out of their bank, and the other will see a credit into their bank, the funds actually have a few steps to travel.

In our example of two Customers sending funds to each other, in reality, the movement will look like:

Sender Bank (ODFI) —> Dwolla Network
Dwolla Network —> Destination Bank (RDFI)

Even though there are multiple steps in the transfer, API Clients and their end users will not see “Dwolla” on their bank statements, but rather, they will see the name of the Client or the party involved in the transfer.

Transfer Timing

Now that we’ve established that bank-to-bank transfers with Dwolla are really broken up into two steps, we can analyze where Next Day timing comes in.

Next Day will only be utilized during the first “step,” or the debiting side of the transfer from the sending party to the Dwolla Network.

With Dwolla’s standard ACH timing, this first step of the transfer can take three to four business days. ACH processing accounts for two days of time, as banks check for return codes such as insufficient funds or transfer not authorized. With Next Day transfers, funds are not held for as long, but rather are passed onto the destination party, resulting in funds completing their first “step” in only 1-2 business days.

Specifying Next-Day Requests

When approved for next-day ACH clearing times, all transfers created will default to Next Day clearing. So a transfer with Next Day clearing will look like:

POST api-sandbox.dwolla.com/transfers 
Accept: application/vnd.dwolla.v1.hal+json
Authorization: Bearer {{token}}
Content-Type: application/json
Idempotency-Key: 3eb4e4ed-0b88-44b6-a67a-a173795c8a5c

{
    "_links": {
        "source": {
            "href": "https://api-sandbox.dwolla.com/funding-sources/9ca7a5d2-9e08-40b6-a8f3-dc30181ef041"
        },
        "destination": {
            "href": "https://api-sandbox.dwolla.com/funding-sources/bc7fee2d-fa79-4b15-9293-482787311153"
        }
    },
    "amount": {
        "currency": "USD",
        "value": "5000.00"
    }
}

But let’s imagine that you want to revert a subset of transfers back to standard ACH timing. You might ask, “why would I ever do this in the first place?” However, one must take into consideration that Next Day forgoes the full ACH processing procedure. By letting the funds go through this processing, your transfers will be less likely to fail post-settlement on a number of ACH returns.

Let’s set our clearing object to standard to indicate that we want this transfer of $5,000 to process all the way through and ensure that the funds don’t fail due to a return code like insufficient funds.


{

POST api-sandbox.dwolla.com/transfers
Accept: application/vnd.dwolla.v1.hal+json
Authorization: Bearer {{token}}
Content-Type: application/json
Idempotency-Key: f5c33a2a-e797-4126-81fc-180a0a762055

{
    "_links": {
        "source": {
            "href": "https://api-sandbox.dwolla.com/funding-sources/9ca7a5d2-9e08-40b6-a8f3-dc30181ef041"
        },
        "destination": {
            "href": "https://api-sandbox.dwolla.com/funding-sources/bc7fee2d-fa79-4b15-9293-482787311153"
        }
    },
    "amount": {
        "currency": "USD",
        "value": "5000.00"
    },
    "clearing": {
        "source": "standard"
    }
}

By creating business rules to indicate which transfers are expedited and which as sent on standard timing, you can greatly reduce the risk of ACH returns, leading to less headache over payment disputes.

Funds Moving Faster

End users are increasingly expecting faster payments and quicker funds transfers. While there are even more ways that our API clients utilize Next Day, it goes without saying that quicker clearing times can add to higher satisfaction for your end users. Because who doesn’t like getting their money quicker?

Get started testing Next Day functionality in the sandbox today.

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