ACH Payments Continue Upward Spiral as Adoption Quickens

SEATTLE -The use of automated clearing house (ACH) payments increased 12% in 2003 as the use of electronic channels continues to diversify and expand, according to NACHA – The Electronic Payments Association. NACHA said that 10 billion ACH payments valued at $27.4 trillion were processed in 2003. Of that, $2.8 trillion were from the federal government, an increase of 3.5% over 2002. ACH payments include direct payroll deposits, business-to-business payments and federal tax payments. “The results that NACHA announces today are proof of consumers’ increasing use of electronic payments,” Leonard J. Heckwolf, chairman of NACHA and senior vice president for consumer payment solutions at Bank One, said at the PAYMENTS 2004 conference last week in Seattle. “The greater reliance on electronic payments benefits financial institutions of all types and sizes, as well as their customers,” Heckwolf said. NACHA also said that for the first time, the number of debits originated by commercial financial institutions exceeded the number of credits, largely due to the rapid growth of the five consumer ACH debit applications implemented since 1988. They are: * Internet-initiated ACH debit: American consumers initiated 689 million ACH debits on the Web, tripling in volume for the second consecutive year. NACHA estimates that 80% were to pay bills, 18% were fund transfers and 1% was for purchases. The average amount of a Web e-check was $291. * Accounts receivable (ARC) check conversion: More than 220 million consumer check remittances were converted into ACH debits, an 825% increase over 2002. The average amount of an ARC payment was $296. * Point-of-purchase (POP) check conversion: Approximately 204 million consumer checks were converted into * ACH debits at retail locations, up 22%. The average amount was $70. * Telephone-initiated ACH debits (TEL): Americans made 170 million e-check payments over the telephone in 2003, up 151%. The average amount was $374. * Re-presented check (RCK): Retailers made 31.3 million RCK transactions in 2003, up 20.1%. The average dollar amount was $155. A re-presented check entry is a consumer NSF check that is re-presented for payment electronically rather than through the paper check collection system. NACHA, which represents more than 12,000 financial institutions through the ACH, also said that the number of direct deposits in 2003 increased by 4.2% to more than 4.0 billion payments, and said that more than 65% of the private-sector workforce in the U.S. use the service. Meanwhile, financial electronic data interchange (EDI) traffic grew by 19.5% to 630 million remittance records exchanged over the ACH network in 2003. Financial EDI is the electronic exchange of payments, payment-related information or financial-related documents in standard formats between business partners. Those include payments among trading partners, intra-company cash management transfers, government vendor payments, and business-to-government tax withholdings. They totaled $19.7 trillion, accounting for 71.7% of the money moving through the ACH network, the organization said. -