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Same-Day and P2P Volumes Boom on the ACH

While Back-Office Conversions Stage a Comeback

Jim Daly, Digital Transactions, February 1, 2019

Growth on the automated clearing house network continued apace in 2018’s fourth quarter, boosted by same-day transactions, person-to-person payments, and online commerce.

The massive network linking nearly all of the nation’s financial institutions tallied 5.97 billion transactions, up 8.7% from 5.49 billion a year earlier. It was the network’s fastest growth in 11 years, according to NACHA, the ACH’s governing body. Volume consisted of 3.5 billion debits and 2.4 billion credits.

The big ACH news for the past couple of years has been same-day transactions, which promise to meet demand for faster clearing and settlement, and help the network meet growing competition from financial-technology companies. Same-day ACH transactions—credits and debits combined—grew 46% year-over-year to 51.3 million from 35.2 million in 2017’s last quarter, Herndon, Va.-based NACHA reported this week.

Growing slightly faster are P2P payments, which in ACH terminology are dubbed WEB credits. Popular P2P services such as Venmo from PayPal Holdings Inc. and the bank-backed Zelle service generate ACH credits. Such transactions totaled 37.9 million in the fourth quarter, up 46.9% from 25.8 million a year earlier.

“P2P payment services have been commonplace for some time, but what we are seeing now with the more significant year-over-year growth is adoption,” Michael Herd, NACHA’s senior vice president of ACH network administration, tells Digital Transactions News by email. “Consumers are using these services more and more in their everyday lives to make payments to others easily and quickly, and service providers are using ACH. And we only anticipate that continued adoption and usage will continue.”

WEB debits, NACHA’s second-largest transaction code, includes e-commerce payments and grew 14.5% to 1.57 billion transactions versus 1.37 billion in 2017’s fourth quarter.

Several ACH payment codes are linked to conversions of paper checks and have been in long-term decline. ARC, the code for checks converted to ACH payments at lockboxes, typically bill payments, posted 268.2 million transactions in the fourth quarter, down 8.7% from 293.7 million a year earlier. The POP code, for checks converted at the point of purchase, saw volume fall 12.2% to 50.1 million transactions.

But there was one surprise. BOC, the code for checks written in stores and converted in a back office, saw volume surge 11% to 28.2 million from 25.4 million at the end of 2017. The growth rate was even bigger, 22.4%, from the third quarter’s 23 million transactions.

BOC’s revival is probably temporary. “While Q4 2018 saw growth in BOC, it likely is due to an implementation program by one or a small number of retailers,” Herd says. “We don’t anticipate a significant change to the long-term trend of declining check usage.”

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