Guess Who’s Growing Fast

The pandemic has speeded adoption of the automated clearing house network for business-to-business payments, while transactions cleared and settled through the network on the same day they’re initiated are booming, according to full-year 2021 numbers released early last month by Nacha, the governing body for the nationwide network.

We’ve written before in these pages about the growth—and expanded utility—of the ACH for payments. But because we’re talking about a 48-year-old system, perhaps the story gets lost among all the glitter of newer and sexier payment methods.

So it’s worth focusing again on the growth of the ACH, particularly in faster payments, peer-to-peer transfers, and other categories. All told, the ACH handled 29.1 billion transactions last year, up 8.7% from 2020. Dollar volume totaled $72.6 trillion, up fully 17.4%. By contrast, Visa, the world’s largest card network, processed 164.7 billion transactions last year worth $10.4 trillion.

The biggest gainers on the ACH last year were peer-to-peer transactions, up 24.6% to 271.2 million payments, and B2B, up 20.4% to 5.3 billion transactions. Health-care payments followed closely with a 17.9% rise year-over-year, to 426.3 million.

But perhaps the biggest story at the ACH lies in the network’s relatively new same-day payments category, which began operations in 2016. These payments totaled 603.8 million for the year, worth $943.7 billion, representing increases of 73.9% and 105.1%, respectively.

The same-day category embraces both credits and debits, with debits claiming 55% of the transactions but 42% of the dollar value. Looked at another way, the same-day service processed 2.4 million payments daily last year worth $3.7 billion.

Same-day isn’t real time, but it may well meet the needs of most users for some time to come. And same-day ACH is expected to acquire even more momentum this month when a new rule extending the per-payment cap to $1 million takes effect, a 10-fold increase from the old limit. The move, requested by banks, is one Nacha expects will widen the usefulness of the service.

The decision to raise the dollar limit follows other measures Nacha has made to facilitate same-day ACH. In March last year, the network added a new settlement window at the end of the processing day to extend the time in which banks can handle same-day items. As a result, the latest daily deadline for same-day ACH has moved to 4:45 p.m. Eastern Time, two hours later than the former cut-off. The move in part was a response to banks in the Pacific time zone that now have more leeway to enter same-day volume.

So don’t be quick to neglect the massive ACH network when looking at faster—and newer—payment channels.

—John Stewart, Editor, john@digitaltransactions.net