What does ASAP mean in payments?

ASAP isn’t just the acronym we use in our everyday lives. In payments, it holds a different meaning. If you are based in the US, you may already be familiar with this term. Though it is unlikely you will come across it in your day-to-day, ASAP is an essential system for federal payments in the US. This article explains what ASAP stands for in the payments industry and how it works.  

What is ASAP?

ASAP, short for Automated Standard Application for Payments, is an electronic payment and information application used by federal agencies in the United States. Initially, it was developed by the Financial Management Service (FMS) and the Federal Reserve Bank of Richmond, which now operates the system. The ASAP allows organizations receiving federal funds to draw these funds from pre-authorised accounts established by the agencies issuing the payments. It is free to use for both parties.  

Recipient organisations must be enrolled by the federal agencies, responsible for authorizing every payment, managing their accounts, and providing technical support. The list of recipient organisations includes state and local governments, educational institutions, banks, other financial institutions, and vendors and contractors. ASAP only applies to organisations receiving federal funds- it doesn’t apply to any other party or individual. In this tax year of 2019, close to half a million payments were processed, totaling $594 billion.

How organisations can enroll in ASAP

Receiving organisations must have a Data Universal Numbering System (DUNS) to receive a payment via ASAP. They can get one for free by filling in this form. Organisations must also have an active registration in the Central Contractor Registry (CCR), and the registration is also free of charge. Once organisations meet these two conditions, the process goes as follows:

1. Federal Enrollment Initiator starts the enrolment process by entering the DUNS, TIN, contact information for the Point of Contact, and type of organisation.
2. Organisations can enroll online. The Point of Contact nominated by the organisation needs to confirm that all the information entered is correct and to enter information for the other officials who have roles in ASAP.
3. The Head of Organisation approves this information.
4. The Authorising Official confirms that all information is correct and identifies who in the organisation will use ASAP.
5. The Financial Official enters the organisation’s bank account details.
6. ASAP notifies the federal agency’s Federal Enrollment Initiator, who completes the enrollment.
7. Organisations are notified that the enrollment process is completed, and the funded accounts are ready.
8. Organisations can log in to ASAP to request payments, see payment status or get reports. They will also get a ASAP ID which they can use for reference.

Recipient users and roles for ASAP

Various roles must be fulfilled to receive federal funds through ASAP, some of which we mentioned in the section above:

• Initial Point of Contact – added by the federal agency, self-designates all roles, and adds additional users
• Point of Contact (POC) – adds users and can modify their roles
• Head of Organisation (HOO) – approves changes to users and their roles
• Financial Official (FO) – enters and manages bank account details
• Authorising Official (AO) – Adds Payment Requestors and Inquirer Only users
• Payment Requestor – initiates payment requests
• Inquirer Only – Runs reports

When will organisations see the funds in ASAP?

The US Treasury may take up to 10 business days to validate bank information. Once this information is validated, the federal agency can enter the organisations’ ASAP ID into their financial system and link it to ASAP. Once this link is established, the funds will be transferred to the correspondent account. ASAP suggests waiting at least 15 days for the payment to be completed after enrollment.

Types of ASAP payments

There are two main types of ASAP payments: Fedwire and ACH transfers. ASAP payments can be processed on the same day or scheduled for a specific calendar date, depending on the type of payment organisations choose. Let’s check the differences between both:

Fedwire

Fedwire offers real-time payment settlement, so payments are processed instantly. Despite being quicker than ACH payments, Fedwire transfers often come with added costs, such as bank fees, making them more expensive. You can check their 2022 pricing structure for a detailed overview of all the potential costs and extra expenses you may be charged with.

ACH

ACH offers next-business-day settlement or same-day settlement for payments requested before 2:30 pm Eastern Time. Though you can’t receive your funds instantly, there are fewer costs associated with ACH transactions. The ACH network is often the preferred payment system for ASAP payments, as it is cost-effective and secure and enables payments to be scheduled for later dates. Have a look at our latest post if you want to know more about the ACH network and how it works.

Advantages of ASAP

• Flexible payment options (Fedwire or ACH network)
• Live customer support
• Unlimited report access
• Web-based and secure
• Reduces the liability of having funds held outside of the Treasury
• There are no fees to use ASAP

ASAP offers a range of training opportunities for organisations that wish to learn more about it. You can visit their Resources page to access their webinar training and further information and check their user guide.

About Imburse

Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using various payment technologies and providers around the globe.

In a world where consumers’ payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or needs, Imburse will connect you to your choice of technology and provider.

Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.