On a Hot Streak, the ACH Network Has Racked up 5%-Plus Growth in 12 of the Last 14 Quarters

The growth surge at the nation’s automated clearing house network shows no signs of slowing down. The payments system handled 5.68 billion transactions in the quarter ended June 30, a 6.2% increase year-over-year, according to numbers from Herndon, Va.-based NACHA, the network’s governing body. The network has now notched growth exceeding 5% in 12 out of the 14 quarters since the start of 2015.

Faster payments on the network, which links virtually every bank in the country, totaled 40.9 million in the quarter, up from 11.9 million in the second quarter of 2017. These are ACH credits and debits processed the same day they are initiated. Under NACHA rules, banks ushered in same-day credits in September 2016, with same-day debits following a year later. Traditional transactions typically clear and settle the next day.

For the first half of 2018, same-day transactions totaled 83.5 million, up from 25.2 million same-day credits in the first half of last year, according to the NACHA figures. The organization has under consideration a proposal to lift the per-transaction limit on same-day transactions to $100,000 from $25,000. Comments on this proposal closed on Feb. 23. Transactions at or under $25,000 account for approximately 98% of the total, according to NACHA.

In peer-to-peer payments, the network processed 29.4 million transactions in the second quarter, a 24% increase year-over-year. P2P is a closely watched payment category these days with explosive growth at companies such as PayPal Holdings Inc., with its popular Venmo service, and Zelle, a bank-owned alternative. P2P volume, which falls under the WEB credits NACHA code, totaled 58.1 million transfers for the first six months of the year, up 24% from the same period last year. Indeed, WEB credits is the fastest-growing ACH transaction code so far this year.

WEB debits, which include e-commerce payments, grew 14% to 1.44 billion in the quarter. These represent the second-largest ACH code in terms of transaction volume.

The largest code embraces so-called pre-arranged payments and deposits, or PPD. PPD credits, the ACH’s original application, grew 4.22% year-over-year to 1.68 billion items. These refer to payroll direct deposits. Another variety, called PPD debits, routes consumer payments for recurring obligations like health-club dues, homeowners’-association levies, and the like. These increased 4% to crack the 1-billion level.

Still, codes that cover check conversion are slowing with the decline in check volume. The ARC application, which converts checks sent by consumers to billers’ lockboxes, totaled 280.6 million items in the June quarter, down 8.24% year-over-year. But the POP and BOC applications are sliding even faster, down 16.5% to 50.3 million transactions and 15.6% to 22.5 million, respectively. Both codes refer to checks presented at retail checkouts; with POP, these are converted at the register and handed back to the customer, while with BOC they are converted later in a back office.