ACH Network Volume Climbs 5 percent in First Quarter As ‘Native Electronic’ Items Sizzle

By John Stewart

As participants in the 40-year-old automated clearing house network get ready to implement same-day clearing capability, network growth continues to percolate, according to the latest numbers from NACHA, the Herndon, Va.-based rules-setting organization for the ACH.

Transactions totaled 4.72 billion in the first quarter, an increase of 5.3% over the same period in 2014, and nearly equal to the holiday-influenced fourth quarter. This is also the fastest quarterly growth for the ACH since the third quarter of 2013. Total value moved across the network came to approximately $10.2 trillion, NACHA said.

Nearly half the network’s traffic consists of so-called pre-arranged payment and deposit transactions, which totaled 2.33 billion credits and debits. PPD debits, where billers collect payments electronically from consumers according to pre-arranged terms, rose 4.8% year-over-year to 871.4 million transactions. These payments are common with, for example, health clubs, homeowners’ associations, and charities.

PPD credits, which include payroll direct deposit from employers, grew a robust 4.8% to 1.46 billion transactions, accounting for just short of one-third of all ACH traffic.

The fastest-growing transaction types remain what NACHA calls “native electronic” items, or transactions that originate in electronic formats. The largest of these categories is WEB, the application used chiefly for online bill payments but also includes mobile transactions. WEB totaled just shy of 1 billion transactions—986.9 million—a 13% jump over last year.

Interestingly, NACHA now distinguishes between WEB credits and WEB debits. The latter account for the bulk of WEB traffic, but credits, which are used for person-to-person payments, grew from a mere 39,115 in last year’s first quarter to 10 million this year. The huge increase stems from a NACHA rule that went into effect in March and requires all originating financial institutions to use WEB credits for P2P transactions, according to a NACHA spokesperson.

Also, TEL, for transactions consumers conduct with sellers over the phone, grew 12% to 114 million. And the IAT application for cross-border transactions is also growing fast. It’s up almost 32% to 17.1 million items.

E-check applications that convert paper checks into electronic items, however, continue to decline along with consumers’ check usage. ARC, the code that converts checks in billers’ lockboxes, fell 8% to 378.9 million items. And POP and BOC, both of which convert checks received by merchants, both saw dwindling volume.

The former, which deals with checks processed at the point of sale, declined 13.8% to 75.6 million transactions. The latter, in which checks are converted later on in back offices instead of immediately at the cash register, fell 11% to 35.7 million items.

NACHA’s statistics do not include so-called on-us transactions, or cases in which an item is handled by a financial institution that houses both the payor and payee accounts.

The ACH same-day settlement plan will be implemented in three phases. The first phase, which will embrace credits, will begin in September of next year, with debits following in phase 2 in 2017. Ultimately, Phase 3 will usher in mandates for receiving financial institutions for faster ACH credit funds availability.