ACH E-Checks Post a Mixed Record of Growth for the Second Quarter

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E-check growth on the automated clearing house network was a mixed bag in the quarter ended June 30, according to statistics posted late last week by NACHA, the regulatory body for the ACH. In line with this trend, applications involving no paper items to start with—a key growth market for the ACH—saw year-over-year growth but slipped from their first-quarter performance.

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Online payments to billers increased nearly 10%, to 657.3 million transactions, compared to the same quarter in 2010. These are transactions handled under the ACH’s WEB application, which for some time now has been the network’s biggest e-check category. They represent payments consumers make on the Web sites of utilities and other billers. Still, WEB traffic, which also captures a small number mobile transactions, dipped slightly from the 664.6 million transactions NACHA recorded in the first three months of 2011.

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By contrast, the ARC application continued a steady decline , falling 10.2% from the year-ago quarter to 498.8 million payments. Once the ACH’s biggest e-check code, ARC embraces payments consumers make by paper check and send to billers’ lockboxes. The ARC process converts these checks into electronic files. Hence, ARC’s downward drift in volume mirrors the general decline of checks overall in the U.S. economy.

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WEB, on the other hand, is what NACHA calls a native electronic payment, which refers to payments that originate as electronic transactions rather than starting out as checks and undergoing conversion later. These types of payments represent what NACHA sees as a key growth category for the ACH in the years to come as the volume of paper checks dwindles.

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NACHA’s two point-of-sale payment codes, POP and BOC, had a mixed quarter. POP, which refers to checks converted by the cashier in front of the customer (with the check being returned to the customer on the spot), dropped 3% from its year-ago volume, to 126.4 million transactions. The category grew 6%, however, over the 119.1 million payments recorded in the first quarter.

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BOC, a newer application introduced four years ago, continues on a healthy ascent, with 46.4 million transactions in the latest quarter. That’s up 5.4% over 2010’s second quarter and 8% over the traffic posted in the first three months of the year. BOC, or back-office conversion, allows retailers to bundle up checks accepted throughout the day and convert them to electronic format in a central office, or “back office.”

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Bill payments via the phone, handled under the TEL code, grew 4.5% compared to the same quarter last year, to 89.6 million transactions. TEL volume dropped, however, from the 93.2 million payments logged in the first quarter. Like WEB payments, a TEL transaction is a native electronic payment.

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The  biggest gainer for the quarter, albeit on a small base, was IAT, an application introduced in 2009 for international payments. This volume began to soar in the second quarter, growing fully 219% to 7.2 million transactions compared to 2.2 million in the first three months. Volume is up 373% over the year-ago quarter’s 1.5 million payments.

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NACHA’s statistics do not include so-called on-us transactions, or those payments involving consumer and business accounts housed at the same financial institution.