3Q ACH Volume Hits 2 Billion But E-Check Growth Cools off

The automated clearing house is handling more electronic transactions than ever, though growth in its electronic check category is showing signs of cooling off. The National Automated Clearing House Association reports the ACH network interchanged almost 2.1 billion transactions among financial institutions overall in the third quarter, the first time that statistic exceeded the 2 billion mark in a quarter (NACHA statistics do not count on-us volume). With federal government volume thrown in, the volume exceeded 2.3 billion. The five e-check categories of payment?in which consumer checks are either converted into electronic ACH debits or in which the transactions are handled as electronic payments from the start?grew to 537.3 million in third quarter, a 14% increase over the second. Accounts-receivable conversions (ARC), at 266.2 million, now account for almost half of all e-check transactions and have become a major driver of ACH growth. ARC refers to the conversion of checks received at corporate lockboxes into electronic debits. WEB transactions, or those conducted by consumers to pay billers on the Internet, totaled 178.3 million, up 4.5% from the second quarter. The other three types of e-check, in order of volume, are TEL (payments over the phone), POP (point of sale payments at retail locations), and RCK (electronic representment of returned checks). Though total e-check volume doubled compared to the year-ago quarter, the most recent quarterly growth rate is less robust than has been seen lately. Quarter-to-quarter growth rates since the middle of 2003 were at or more than 20% until the third quarter. ARC, which has ballooned from just 43.7 million transactions in the third quarter last year, saw its growth rate plunge in the latest period. Still, ARC grew 27% in the third quarter over the second, a better rate of growth currently than that seen with other forms of electronic payment, such as PIN and signature debit. At the same time, increases in ARC volume are coming on a dramatically increased volume base. NACHA projects that, with estimated on-us volume included, ARC transactions will reach 1.25 billion this year, a six-fold increase over 2003.