Despite Its Sprawling Size, the ACH Has Been Racking up Impressive Growth

The nation’s automated clearing house network is on a tear. Transaction volume grew by 6.3% for the fourth quarter of 2017 and by 5.7% for the full year, according to numbers released late Tuesday by NACHA, the governing body for the ACH system. All told, the network handled $46.8 trillion in value for the year, a 6.9% increase from 2016, on 21.5 billion payments.

Growth like that is remarkable only because it’s hard for a network this size to eke out measurable increases. But the ACH has been particularly active since the start of 2015, racking up year-over-year transaction growth exceeding 5% in 10 out of the 12 quarters in that span of time. All told, the network—which links virtually every financial institution in the United States—has added at least 1 billion transactions every year since the end of 2014.

Same-day activity, while still small relative to total network volume, is increasing especially fast now that NACHA has added same-day processing for debit transactions. Transactions processed the same day came to 75 million last year, up 478% over 2016, which included less than four months’ worth of same-day activity. Same-day processing began in September 2016 with credit transactions and expanded to include debits a year later.

Same-day volume is likely to get a further boost if NACHA follows through with reported plans to raise the transaction cap from $25,000 to $100,000.

Other fast-growing categories in 2017, according to the NACHA numbers, include: business-to-business (3.3 billion transactions, up 5.6% for the year); direct deposits (6.5 billion, up 5.8%); Internet-based volume (5.2 billion, up 13.1%); and person-to-person payments (97 million, up 23.3%).

For the fourth quarter, total transactions grew 6.33% year-over-year to 5.49 billion, according to the numbers from Herndon, Va.-based NACHA, which sets the rules for the 44-year-old ACH. WEB credits continued to be a hot category, racking up a nearly 25% increase to 25.8 million transactions. This category includes P2P payments on mobile devices. WEB debits, which includes e-commerce activity by consumers, grew 13.9% to 1.37 billion payments.

Also showing healthy growth was the TEL code, which includes payments initiated over the telephone (139.5 million, up 7.22%). Pre-arranged payments and deposits, or PPD, continued to grow, though not as smartly as newer applications like WEB. PPD credits, the ACH’s original application, grew nearly 6% to 1.63 billion items. These refer to payroll direct deposits. Another variety, called PPD debits, routes consumer payments for recurring obligations like health-club dues, homeowners’-association levies, and the like. These increased 3.2% to 976.2 million.

But applications that depend on the conversion of paper checks to electronic formats remain on a slow but steady decline, along with the volume of checks. The ARC application, which converts checks sent by consumers to billers’ lockboxes, totaled 293.7 million items, down 8.47%. The big losers were POP, down 14% to 57.1 million transactions, and BOC, down 16.6% to 25.4 million. Both codes refer to checks presented at retail checkouts; with POP, these are converted at the register and handed back to the customer, while with BOC they are converted later in a back office.