BECU has rolled out same-day payments for its dealer partners as the credit union looks to increase funding speed as dealer cash flow remains squeezed amid elevated interest rates.

The Tukwila, Wash.-based credit union has seen its funding time drop to five hours since rolling out same-day payments in July, down from 17 hours when it was using Automated Clearing House’s (ACH) next-day payments, BECU Senior Manager of Indirect Lending Andrew Whittenberg told Auto Finance News, a sister publication to Bank Automation News.

BECU worked with CUDL, a subsidiary of Origence, to speed up funding by tweaking existing ACH processes with the technology provider, Whittenberg said.

Under the previous process, CUDL sent BECU a physical file called a National Automated Clearing House Association file, or NACHA file, with dealers’ routing number and account information, Whittenberg said. Once CUDL sent the file, BECU input the information into the Fed system and funds were automatically dispersed by 9 a.m. the next day.

A closer look at the file, coupled with a conversation with BECU’s Fed participants, revealed that BECU could push money out faster if CUDL changed the date on the NACHA file.

“It was as simple as me reviewing the NACHA file itself … and realizing that CUDL was preparing the file with the next day’s date,” Whittenberg said. “We asked our wire room and our Fed participants, ‘What does that mean? Can we push this money sooner?’ They said no, because of the file date … on the report.”

CUDL — after some development — was able to amend the date so it could be submitted to the Fed’s system for same-day funding, Whittenberg said.

“In doing so, we had to change our cutoff time from 4 p.m. [PT], and move it to noon [PT],” he said. “The banking world leans on East Coast time. So, the latest cutoff time was the 1 p.m. [PT] Fed cutoff time and [we could] still make sure that dealers were still getting their money here on the West Coast by 5 p.m. [PT] in their bank account.”

Deals that come through after noon are funded the next day, Whittenberg said, noting that BECU disperses about $6 million across a couple hundred loans per day.

Increased transaction limits spur adoption

The push for same-day funding comes after the ACH in 2022 increased the dollar limit per transaction to $1 million, up from $100,000, he said. In 2020, the transaction cap was raised to $100,000 from $25,000, according to NACHA.

“Most car loans are more than $25,000,” Whittenberg said. “It wasn’t really practical to be using [that] in a business-to-business relationship for car dealers.”

Auto lenders have been increasingly turning to real-time payments to speed funding for their dealer partners since the transaction cap was raised. TD Auto Finance launched real-time payments (RTP) for dealers in April 2022, and U.S. Bank launched RTP in August 2022.

The Clearing House, too, has been looking to expand its reach with financial institutions, including those that participate in the used-car market, Chief Client Officer Elena Whisler told BAN.

“We are looking to mature a few verticals to really [incentivize] behavior change,” Whisler said. “With new technology and new payments, you’re always looking to show what the experience is going to be that’s different.”

The Clearing House has roughly 475 financial institutions on its rails, and added about 200 in 2023, Whisler said.

— Additional reporting by Whitney McDonald

Editor’s note: This article first appeared on Auto Finance News, a sister publication to Bank Automation News.