Latest Stats Show WEB Poised to Displace ARC as E-Check Leader

As bills paid the old-fashioned way–through the mail–decline while online bill payments boom, a Digital Transactions News analysis of recent automated clearing house data shows Internet-based e-check traffic approaching transaction volumes of check conversions for conventional bill payments. At the current rate, the Web-based payments could surpass these paper-based check conversions within a year. ARC, the accounts-receivable conversion code for checks sent to lockboxes, tallied 595 million transactions in the second quarter, off 6.8% from 638.6 million transactions in the first quarter and down 11.2% from 669.8 million transactions in 2008's second quarter. That's according to the new second-quarter report from Herndon, Va.-based NACHA, governing body of the ACH. In contrast, the code for ACH Internet bill payments, WEB, posted 558.5 million transactions in the second quarter, down 1.2% from 565.2 million in the first quarter but still up by 10.5% from 505.6 million in the year-earlier quarter. Most of WEB's volume comes from consumers making online bill payments that draw funds from their demand-deposit accounts. Expressed another way, WEB's volume amounted to 94% of ARC's in the second quarter. The WEB-to-ARC percentage was 88% in the first quarter, 78% for all of 2008, 65% in 2007, 64% in 2006 and 62% in 2005, according to NACHA figures. After enjoying big growth since early this decade as billers converted their paper checks from customers to ACH transactions, analysts predict ARC volumes will fall as check writing in general falls. But WEB is a so-called native electronic payment that does not originate from a paper document and is poised for growth as consumers seek online alternatives to credit cards. WEB and the young BOC, for back-office conversion, were the only two of NACHA's five electronic-check codes to grow in the second quarter on a year-over-year basis. BOC, which allows retailers or their processors to convert checks to ACH transactions in their back offices, posted volume of 35 million in the second quarter, up 288% from 9.02 million transactions in 2008's second quarter and up 4.5% from 33.4 million in this year's first quarter. BOC went live in March 2007. POP, for point of purchase, tallied 117.4 million transactions in the second quarter, up 7.5% from 109.2 million transactions in the first quarter but off 4.1% from 122.4 million a year earlier. NACHA developed BOC as an easier-to-implement alternative for POP, though the earlier code has shown surprising strength with users such as Wal-Mart Stores Inc. TEL, the code for telephone-based ACH payments, saw transaction volume slip 4.7% to 82.2 million from 86.2 million in 2008's second quarter and 4.2% from 85.8 million in 2009's first quarter. In all, the ACH network posted total volume of 3.83 billion transactions in the second quarter, up 2.5% from 3.74 billion in the prior-year quarter and 1.5% from 3.78 billion in the first quarter. The figures do not include on-us transactions, in which the same bank is the originator and receiver of the payment.