I have another potential client that I need to explain it to, but I really want to get it right, and I asked in this forum because I think other potential customers of yours might benefit too.  If I'm wrong just delete the topic and post the answer elsewhere.

But can you explain why it makes more sense to wait than get thier money after 48 hours like credit cards?

In ACH the return timeframe allows for returned items to come in as late as day 4 as a merchant would count.  Let me give an example.

A transaction submitted on Monday is considered by the merchant to be day one, but by NACHA and banking standards it's day -1.  Monday night the item goes through the network and the following morning becomes a settlement item, so this is called day 0, or settlement day.  This is Tuesday.

The Receiving bank now has until the opening of business on day three to have the return back to the Originating bank.

Wednesday, Thursday, Friday.

So all returns should be in by Friday morning, we settle Monday's items on Friday night and the merchants have their funds on Monday morning.

This is called the Good funds model because all funds sent to the merchant are no longer subject to returns except in the case of a disputed (unauthorized) item.

In this scenario, the only activity to the merchants account is deposits and fees, and perhaps an occasional charge back.

Shorter settlement than this create reconciliation problems because returns that come in after settlement are debited against the merchant account instead of deducted pre-settlement and their bank account sees a lot more activity with funds in and out.

I hope this helps.

Paul

When I explained it like that, my prospect said that makes sense and is fine with it.