ACH Transaction Volumes Might Be Headed for a ‘New Normal’

Driven by fast growth in “native payments” that dispense entirely with paper checks, total automated clearing house network volume increased 4.4% in the first quarter over the year-earlier period, the ACH network’s highest quarterly increase since 2008’s fourth quarter.

Michael Herd, managing director of network rules at ACH governing body NACHA, says it’s too soon to draw conclusions about the increase, but he notes that many of the transaction categories for electronic checks and native payments rank among the fastest-growing in the network. “It’s a great result for one quarter,” Herd tells Digital Transactions News. “We\'ll just have to see if that\'s the new normal.”

The ACH network handled 4.19 billion transactions versus 4.02 billion in 2011’s first quarter. Four payment codes that originate with paper checks saw total transaction volume decline 6.5% while everything else, the all-electronic codes, grew 6.6%, according to Herd.

Almost half of total ACH volume is direct deposit of payroll checks and government benefits, and related transactions. Among the e-check transaction types, the WEB code that covers many online-banking bill payments grew 8.7% year-over-year to 722.3 million transactions from 664.6 million.

While WEB is rising, the code for checks mailed to lockboxes, ARC, for accounts-receivable conversion, is shrinking with consumers writing fewer checks. ARC is still big, but its volume fell 7.4% to 483.5 million transactions in the first quarter from 522.2 million a year earlier.

Two e-check codes for checks written at the point of sale had varying fortunes in the first quarter. POP, for point of purchase, slipped 8.9% to 108.6 million transactions versus 119.1 million a year earlier. Herd attributes the slippage to the overall decline in consumer check writing. The newer back-office conversion code, in which retailers or their processors convert paper checks to electronic form at a central facility, apparently is still benefiting from new business despite the drop in check writing, having increased 11.8% year-over-year to 48 million transactions from 43 million. BOC’s volume did fall 13% from 55.1 million transactions in 2011’s fourth quarter, but Herd attributes that to normal seasonal patterns.

Herndon, Va.-based NACHA’s IAT code for international ACH transactions, which went live in September 2009, may have completed its initial boom even though transactions increased 368% to 10.5 million from only 2.25 million in last year’s first quarter. Volumes increased only 1.1% from 10.4 million in the fourth quarter. PayPal Inc., which has millions of customers abroad, adopted IAT in late 2010 and 2011, according to Herd. “My feeling is that they’ve completed that adoption,” he says, adding that some of IAT’s volume also comes from federal benefits sent electronically to beneficiaries living abroad.

Telephone-based payments using the TEL code dropped 6.1% to 87.5 million transactions from 93.2 million in 2011’s first quarter.

CIE, an ACH credit code for online bill payments and person-to-person payments, grew 12.2% to 41.7 million transactions versus 37.1 million a year earlier. CIE includes transactions from the NACHA-sponsored EBIDS bill-pay program.