ACH Bill Payments Shine As Other E-Checks Dim with Check Decline

Internet bill payments were the star performers among the established electronic-check payment options during the fourth quarter, according to figures released Wednesday by the governing body of the automated clearing house. NACHA reports that transaction volume on its WEB e-check code, the code for online transactions such as bill payments, grew 16.5% to 552.1 million transactions from 474.1 million in 2007's final quarter. The fourth-quarter figure, which represented $220 billion in payments, also was up by 5.6% from 522.9 million transactions in the third quarter. WEB's increase reflects the long-term consumer shift from writing checks, a shift that is taking volume from the ARC e-check code for lock-box payments, and, on the flip side, greater use of online bill pay, according to Janet O. Estep, president and chief executive of Herndon, Va.-based NACHA. “I think it is a combination,” she tells Digital Transactions News. ARC transactions totaled 653.2 million, down 5.2% from 689.3 million in 2007's fourth quarter and up just 0.1% from 652.5 million in the third quarter. “With ARC, you're definitely seeing fewer checks being written,” Estep says. The e-check code for check conversions at stores' checkout lanes, POP, or point of purchase, posted 123.6 million fourth-quarter transactions, down 7.9% from 134.2 million in the year-earlier period but up 5.2% from 117.5 million in the third quarter. The year-over-year decline probably reflects not only reduced check writing in general but also the weakness in consumer holiday spending reported by many retailers, according to Estep. The new code for e-check conversions in retailers' back offices, BOC, continued its high growth. BOC volume of 39.4 million transactions in the fourth quarter represented increases of 1,178% from just 3.08 million transactions a year earlier and 49.2% from 26.4 million in the third quarter as processors and retailers rolled out the service. “The fact that it's picking up is one of adoption,” Estep says. Another e-check code, TEL, for telephone-based ACH payments, posted 85.4 million transactions in the fourth quarter, off 2.5% from 87.5 million a year earlier and down 1% from the third quarter's 86.2 million transactions. Meanwhile, Estep says NACHA's test of Secure Vault Payments, the ACH's effort to capture one-time Internet purchases, will run through this year. The pilot, which began March 31, 2008, was originally set to last 18 months (Digital Transactions News, May 6, 2008). Excluding on-us volume, the ACH handled a total of 3.8 billion transactions in the fourth quarter, up 4.5% from 3.64 billion in the year-earlier period and 2.5% from 3.71 billion transactions in the third quarter. About 62% of ACH volume consists of non-e-check activity.