The ACH’s Hot Streak Cools off As Transactions Rack up a 3.8% Third-Quarter Jump

The automated clearing house network’s nearly uninterrupted growth tear took a breather in the third quarter, the period leading up to the introduction of same-day processing for ACH debit transactions.

ACH transactions totaled 5.3 billion in the July through September quarter, according to NACHA, the Herndon, Va.-based governing body for the network. That’s a 3.8% increase from the same period in 2016, only the second time since the start of 2015 that quarterly transaction growth has fallen short of 5%.

Growth in dollar volume also slipped from recent trends. The network, which links virtually every U.S. financial institution, processed $11.6 trillion in the quarter, up 4.8% from the third quarter of 2016. That’s down from growth rates of 8.2% and 7% in the first and second quarters, respectively,

In September, just as the quarter was winding up, the ACH introduced same-day clearing and settlement of debit transactions. Same-day credits had been introduced a year earlier. All told, same-day volume totaled 10 million in October, including 4.2 million debits in only the first full month of processing. That could augur well for a rebound in volume growth in coming months if faster processing sparks incremental increases in ACH usage.

Among specific ACH applications, WEB credits was the growth leader in the quarter, racking up a 22.5% increase in transactions year-over-year to reach 24.8 million. These transactions include mainly person-to-person payments. WEB debits, which are mostly consumer payments made online, totaled 1.29 billion, a 9.5% increase.

Transactions involving the conversion of paper checks fell by double-digit percentages as check volumes continue a long-term slump. POP, an application that converts checks at the cash register, fell more than 13% to 56.3 million payments. Similarly, an application called BOC that converts these consumers’ checks at retailers’ back offices, dropped 18.3% to 25.2 million items. ARC, which refers to the conversion of check-based bill payments in biller lockboxes, swooned 11.4%, to 297.4 million transactions.

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 5% to 1.57 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 1.8% to 962.4 million.

The introduction of same-day credits in 2016 and debits last September will be followed March 16 by Phase 3 of NACHA’s same-day payments plan. This phase will require financial institutions receiving ACH transactions to make funds available by 5 p.m. local time. Up to now, the rule has been the end of the bank’s processing day, which can be as late as overnight in some cases, NACHA says.