NACHA Survey: Most Consumers Are Familiar, Comfortable with ARC

A majority of consumers who routinely pay their bills with checks are familiar with the process of accounts receivable conversion, or ARC, and better than half express no objection to the process, according to a survey conducted for the National Automated Clearing House Association, Herndon, Va. ARC is a relatively new ACH application, having been introduced by NACHA three years ago, but last year it became the fastest-growing payment type in the history of the ACH, which was created 33 years ago. NACHA estimates it accounted for 1.25 billion transactions last year, including on-us payments, and projects that it could hit 2 billion by the end of 2005. ARC has become increasingly popular as a means for banks and billers to reduce the cost of processing consumer bill payments by converting checks sent to remittance centers and lockboxes to ACH debits. It has been adopted by credit card companies, insurers, utilities, telecom companies, and others that routinely bill consumers and receive payments from them. Among the reasons: next-day funds availability; returned items in two days rather than the up to eight days paper checks can take; and an ACH processing cost of 2 cents per item, versus the 14 to 20 cents it takes to process a retail check. But all along advocates have had concerns about the reaction of consumers to electronic conversion. According to the NACHA survey, which canvassed a nationally representative sample of 404 bill-paying consumers, 69% said they were familiar with ARC while 55% expressed no objections or concerns about the process when given an open-ended opportunity. None expressed concerns about their checks clearing faster. Meanwhile, just 4% had called their banks in the past six months about a payment that had been subjected to ARC. “Those are impressive numbers, given that ARC is less than 3 years old and that that there were concerns about consumer acceptance when it was new,” said Elliott C. McEntee, president and chief executive of NACHA, in a statement. NACHA rules require billers to notify consumers on periodic statements that their payments will be converted to electronic debits. Previous NACHA surveys had indicated that customer-service issues related to ARC were significant for only 1 out of 31 financial institutions. The survey, conducted for NACHA by The Response Center, involved telephone interviews between Oct. 28 and Nov. 7 last year. Its margin of error is plus or minus 4.9%