Digital Transactions Authoritative, insightful and timely information for payments professionals
By John Stewart
@DTPaymentNews
Traffic on the nation’s automated clearing house network has perked up over the last couple of years, and the latest statistics show no slacking off in that trend. Second-quarter transaction volume on the ACH grew 5.6% in the quarter ended June 30, down from the first quarter’s comparatively torrid 6.1% growth but in line with the stepped-up rate seen over the past 18 months.
As reported by NACHA, the governing body for the ACH, second-quarter transactions totaled 5.05 billion, compared to 4.78 billion in the year-ago period. The latest quarterly transactions accounted for about $10.9 trillion in payment volume. NACHA’s figures do not include so-called on-us transactions, which are those that take place between payors and payees whose accounts are housed at the same financial institution.
The second-quarter increase continues a trend that developed early last year and has now produced six consecutive quarters with growth of 5.3% or better. By contrast, the average of the four quarters in 2014 was 4.25%. The new surge in traffic comes as the nation’s financial institutions and merchants prepare for the onset of same-day clearing, which will accelerate ACH transactions from what has typically been next-day settlement. Same-day processing will start with ACH credits on Sept. 23.
The fastest-growing transaction category, as reported by NACHA, is WEB credits, which is made up of person-to-person payments. This volume expanded 39% compared to the same quarter last year, reaching 19.8 million transactions. The P2P category is in ferment industrywide, with such services as PayPal Holdings Inc.’s Venmo service enjoying fast growth. WEB debits, which include online purchases and mobile payments, grew 13% to 1.12 billion.
Another fast-growth category is cross-border payments, covered by NACHA’s IAT application. These grew 12% in the quarter, to 19.9 million transactions.
Much of the ACH, however, is used for automated payroll deposits and recurring bill payments, such as health-club membership payments and dues to homeowners’ associations. The payroll deposits, known as prearranged payment and deposit credits, grew just shy of 5%, to 1.52 billion. The bill payments, called PPD debits, increased 4.76%, to 929 million transactions. Overall, the PPD category accounts for fully 48% of all ACH volume.
Not all of the story has to do with growth. The ACH e-check applications, which cover the process of converting paper checks into electronic formats, continue to decline along with the secular drift downward in paper check volume. The ARC code, which applies to checks sent by consumers to billers’ lockboxes, has been in a steady descent for years. In the quarter, it registered 338 million transactions, down nearly 8% from the same quarter in 2015. Similarly, the POP application, used in stores to convert checks presented at the cash register, fell 15%, to 67.9 million payments.
One particularly resilient ACH code, though, is TEL, which covers payments consumers make to billers over the phone. This category grew 8% to 123.6 million transactions.
Recent developments on the network, besides preparing for same-day ACH, include the announcement of a new rule requiring financial institutions that originate transactions to register so-called third-party senders, or companies that stand between banks and originating merchants. The rule is set to take effect next year.
