Rebounding From 2016’s Fourth Quarter, the ACH Racks up a Robust 6.9% Growth Rate

As the nation’s automated clearing house network introduces faster payments, it’s also racking up steady increases in transaction volume. The system processed approximately 5.35 billion payments in the first quarter, notching nearly 7% growth over the first quarter of last year and rebounding smartly from a tepid 3.7% growth rate in 2016’s fourth quarter.

All told, the network moved $11.5 trillion in volume in the quarter ended March 31, up 8.2% over the same period in 2016, according to figures compiled by NACHA, the Herndon, Va.-based organization that manages the ACH.

The period’s 6.9% growth in transactions is the fastest rate of growth on the ACH network since NACHA started compiling quarterly numbers in the first quarter of 2010. Indeed, the ACH has been on a remarkable growth run for some time. Setting aside that subpar fourth quarter, it has exceeded 5% in transaction growth every quarter since the start of 2015.

In September, new NACHA rules went into effect allowing for ACH credits to be cleared and settled the same day, rather than the next business day. This coming September, the network will start allowing same-day debits. The addition of these faster transactions is taking place against the backdrop of a nationwide faster-payment movement led by the Federal Reserve that could well lead to a new system processing near-real time transfers, observers say. More immediately, same-day ACH is clearly arriving amid robust volume growth on the ACH network, which connects virtually every financial institution in the country.

Among the 14 transaction codes tracked by NACHA, the growth champ in the first quarter was WEB credits, which are mostly person-to-person payments. This category grew 26.2% year-over-year, reaching 23 million transactions. WEB debits, which are generally online consumer payments, rose almost 16% to total 1.26 billion payments.

Also racking up strong growth were prearranged payments and deposits, including the ACH’s original application, PPD credits, which are used by businesses for direct deposit. These grew 6.4% to total 1.65 billion transactions, by far the network’s biggest category. PPD debits, used chiefly to pay recurring obligations like dues for health-clubs and homeowners’ associations, increased 6.1% to 959.2 million transactions.

Another strong entrant, TEL, shot up 11% to 135.9 million payments. TEL measures ACH payments initiated by consumers by telephone.

But some applications continued a long-term decline. Two codes that embrace consumer payments at stores, BOC and POP, sagged 14% and 11.9%, respectively. BOC, or back-office conversion, refers to the conversion of checks in retailers’ central offices for ACH processing. These totaled 27.3 million transactions in the first quarter. POP, or point-of-purchase transactions, involve conversion of checks by the cashier at checkout, and totaled 58.3 million payments. Both applications have declined with the secular decline in checkwriting.

A third application in long-term decline, and for the same reason, is ARC, which refers to the conversion of bill-payment checks collected in billers’ lockboxes. These added up to 322.4 million payments in the first quarter, down 8% year-over-year.

The quarterly statistics compiled by NACHA do not include so-called on-us transactions, payments between parties who maintain accounts at the same bank.