Understand hold times and settlement for ACH and Cards.
Hold times for debit transactions are part of a customer’s configuration that are determined at onboarding. While speed of settlement can be a differentiator, the faster the settlement, the higher the risk. Many factors are taken into consideration when assigning hold times and when calculating the amount of collateral required to process debit transactions with Orum.
Differences Between Same Day ACH & Stand ACH Hold Times
Same Day ACH
Has an effective entry date of the day it is submitted.
Funds will move between the ODFI (Orum’s Bank) and RDFI (the bank being debited) on that day but that does not mean that funds are made available to you on Orum’s platform on that day.
The hold time clock starts on the same day the transfer is requested (effective entry date) and the following banking day is considered the second day of the hold period.
The morning of the 3rd banking day the funds will settle and move from your pending balance to your available balance.
Example TimelinesA2A
1
Monday
Same Day ACH debit submitted at 10:00am ET
Hold time begins
2
Tuesday
Hold time continues
3
Wednesday
Funds Settle at 9:30am ET
Credit is initiated at 12:00pm ET
Funds post in the destination account by the end of the day
Deposits
1
Monday
Same Day ACH debit submitted at 10:00am ET
Hold time begins
2
Tuesday
Hold time continues
3
Wednesday
Funds settle at 9:30am ET
Standard ACH
Has an effective entry date of the next banking day after it is submitted.
Funds will move between the ODFI (Orum’s Bank) and RDFI (the bank being debited) on the next banking day but that does not mean that funds are made available to you on Orum’s platform on that day.
The hold time clock starts one banking day later than the date of submission(effective entry date) and the following banking day is considered the first day of the hold period.
The morning of the 3rd banking day the funds will settle and move from you pending to your available balance.
Example TimelinesA2A
1
Monday
Standard ACH debit submitted at 5:00pm ET
2
Tuesday
Hold time begins
3
Wednesday
Hold time continues
4
Thursday
Funds settle at 9:30am ET
Credit initiated at 12:00pm ET
5
Friday
Funds post in the destination account in the morning
Deposits
1
Monday
Standard ACH debit submitted at 5:00pm ET
2
Tuesday
Hold time begins
3
Wednesday
Hold time continues
4
Thursday
Funds settle at 9:30am ET
You may hear things like “Instant” ACH or “Next Day” ACH but the only difference between a Same Day ACH and a Standard ACH is the effective entry date.This is key because it sets the timeline for when an RDFI must submit a return on any transaction based on the Nacha rules. The majority of returns happen within two banking days but certain returns can happen much later.Details on ACH returns and their timelines can be found in our Returns & Chargebacks guide.
Shorter or longer hold times may be assigned based on the following factors for your business:
When pulling funds from a user’s card, settlement is significantly more straightforward than with ACH. Card transactions include an upfront authorization step that confirms sufficient funds and account validity before the transaction is processed. While there is still a risk of chargebacks due to user disputes, card transactions avoid the common ACH return scenarios such as insufficient funds, invalid account numbers, or closed accounts. Card payments do not invovle the same waiting periods as ACH and settlement is more preditable compared to the delayed return windows associated with ACH debits.For Account Funding transactions (AFT), funds are typically made available the afternoon of the banking day following the end of the processing window at 1:00pm ET. Depending on the card type and the timing of the transaction, this may result in same-day (T+0) or next-day (T+1) settlement.
Note that while the users external account is debited in real time, funds do not settle on weekends for AFT transactions.
Settlement timing may be extended for customers with elevated chargeback rates or other risk factors. In such cases, Orum may apply longer hold periods and delayed settlement configurations to mitigate risk.
It’s important to note that Visa and Mastercard operate on different processing schedules and have different cutoff times. As a result, the exact timing of settlement is influenced by:
Card network used
Transaction time
Applicable hold configurations
Example TimelinesExample 1
1
Monday
Visa or Mastercard AFT/Pull transaction submitted at 1:00pm ET
2
Tuesday
Funds settle at 1pm ET
Example 2
1
Tuesday
Visa AFT/Pull transaction submitted at 5:00am ET (before Visa cutoff)
Funds settle at 1:00pm ET
Example 3
1
Tuesday
Mastercard AFT/Pull transaction submitted at 5:00am ET (after Mastercard cutoff)