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The slow death of paper checks showed up again in the latest quarterly statistics from NACHA, the regulatory body for the automated clearing house network. The ACH, which links virtually every financial institution in the country, allows banks and merchants to convert checks into electronic formats.
But transaction volume on POP, an ACH application in which stores convert checks at the cash register, slid fully 8.5% in the first quarter compared to the January through March period a year ago, to 99.4 million. POP, which stands for point of purchase, dropped even more dramatically from the fourth quarter of 2012, plunging 15% from 117.4 million transactions.
Some of this decline, however, can be chalked up to holiday spending, which inflates transaction volume in the fourth quarter.
A related application that lets retailers batch their checks and convert them at a central location, however, didn’t fare any better. First-quarter transaction volume for BOC, which stands for back-office conversion, fell nearly 10.5% year-over-year, to just under 43 million. Compared to the fourth quarter, BOC dropped 11.5%. BOC’s first-quarter volume is the lowest quarterly traffic the application has generated in two years.
NACHA introduced BOC six years ago as an alternative to POP, which some merchants complained caused delays and added expense at the point of sale. With BOC, stores collect checks during the day as usual and then convert them for ACH processing en masse in a “back office.” But with the steady rise of other payment methods, such as cards, that don’t involve checks, overall check volume at stores has been declining.
Much the same is true of bill payment. Here, the ACH application called ARC, for accounts-receivable conversion, continued to see its volume erode. First-quarter transactions totaled 442.3 million, down 8.5% from the same period a year ago and a 3% drop from the fourth quarter. Billers use ARC to convert checks they receive in lockboxes, but here too there has been a general decline in check writing as consumers increasingly turn to online bill payment.
By contrast, an ACH transaction code for bills consumers pay on biller sites continued its steady rise. First-quarter WEB volume came to 790.3 million, up almost 9.5% year-over-year and 1.35% from the fourth quarter. Applications like WEB benefit from the trend away from check writing, since they involve transactions that begin and end as electronic payments. WEB, for example, captures mobile payments using the ACH as well as payments initiated on a PC.
Another example of this trend is TEL, for payments consumers initiate by voice over the phone. Here, volume jumped 5.25% in the quarter year-over-year, to 92 million. TEL volume was virtually flat with the fourth quarter.
Volume for all ACH applications reported by NACHA excludes on-us traffic, or transactions where the originating and receiving banks are one and the same.
Overall, volume on the ACH network rose modestly in the quarter, climbing 2.9% over 2012’s first quarter to about 4.32 billion transactions. Overall, the network moved about $9.6 trillion in value, a 6.1% increase.
