With Torrid Growth, ARC Becomes the Dominant E-Check Category

The conversion of paper checks into electronic transactions at lockboxes maintained by utilities, insurers, credit card companies and other major consumer billers is growing at a red-hot pace. The process, known as accounts-receivable conversion (ARC), ballooned almost 800% in the second quarter over the year-ago period and now accounts for 44% of all electronic checks processed through the automated clearing house, according to statistics released by the National Automated Clearing House Association. With 208.8 million transactions in the second quarter, the ARC category is now the dominant form of e-check, displacing the WEB category, which refers to transactions initiated by consumers on the Internet. WEB accounted for 170.1 million transactions, or just over one-third of all e-check volume, according to NACHA, whose figures do not include on-us traffic. ARC is driving overall growth for total ACH volume and especially for e-checks. E-check volume more than doubled in the year since 2003's second quarter, hitting 472.5 million transactions. Nor is ARC showing signs of letting up its torrid pace of growth. Just from the first quarter of 2004, its volume jumped 47% from 142.4 million transactions. The other four e-check categories?WEB, TEL (consumer transactions over the phone), POP (point-of-sale payments), and RCK (bounced checks electronically represented)?either grew sluggishly or remained flat after showing steady gains in 2003. With ARC, companies convert checks sent in by consumers to pay bills into an electronic format for settlement through the ACH. As of June 11, a new NACHA rule went into effect requiring billers using ARC to allow consumers to opt out of the process and have their checks processed as paper items if they so choose.