According to NACHA, the American electronic payments association, automated clearing house (ACH) payment volumes grew to over 20.2 billion transactions last year, up 4.35% over 2010, and were worth US$33.91 trillion.
The steady growth of the American ACH network can be attributed to the expansion of the use of native electronic payments (e-payments), increased use of online payments by consumers, and the escalating use of the ACH network for vendor payments and business-to-business (B2B) transactions.
Native e-payments, which start as an e-payment (i.e. non-cheque conversion applications), increased by 5.31% last year, according to NACHA’s recently released figures, reflecting an on-going trend of increased popularity for online e-payments.
"These statistics show that more and more consumers and businesses are making the conscious decision to use electronic payment options over paper cheques or cash," said Janet Estep, president and chief executive of NACHA. "As advancements within the payments industry continue ACH payments also continue to adapt to meet the various needs of consumers and businesses alike."
Consumers' like direct payments
Examining consumer behaviour, consumer-initiated entries (CIE) transactions grew 13.35% year-over-year in 2011. Used primarily in online banking and bill payments, CIE volume in America benefitted from the expanding use of secure vault payments (SVP) and EBIDS for PayOnly, as financial institutions enabled direct payments by consumers via ACH credit payments. This is a trend seen in Europe and elsewhere in the world which is now crossing the Atlantic.
Web transactions, or direct ACH debit payments made when authorisation is given via the internet or a mobile device, also continued on an upward trajectory. Web transactions increased 9.45% and made up 16.67% of total ACH network volumes. NACHA estimates that 80% of these transactions are to pay bills via companies' or billing services' websites.
"Consumers want convenient, versatile, and secure payment options," said Estep. "Direct payment via ACH puts consumers in control and provides them with the flexibility to make payments through their bank or credit union's online banking service, the companies they do business with, and via mobile applications. The breadth of safe and convenient payment options available through the ACH network makes electronic payments a flexible choice for consumers."
Direct payment for B2B transactions on the rise
B2B transactions saw steady growth as well in 2012. CTX and CCD transactions, or those business transactions enabling the use of addenda records, increased 12.69% and 4.89%, respectively, over 2010, said NACHA. The use of addenda records for these transactions grew significantly as well, with CTX addenda use increasing 9.74% over 2010 and CCD addenda use increasing 13.43% during the same period. This shows that businesses are embracing the core competency of the ACH network to transmit payments plus information, as they realise the value of straight-through processing (STP).
Network quality indicators
Even though ACH network usage is increasing the volume of returned transactions remained flat when compared to 2010. Overall, the network return rate decreased to just 0.98% of transactions in 2011. The volume of debit transactions returned as unauthorised declined by 3.14% from 2010. The unauthorised debit return rate for 2011 remained steady at 0.03%.
"This sustained positive trajectory of unauthorised returns attests to the quality of ACH transactions," said Estep. "Better quality leads to increased efficiencies and reduced costs for all parties involved in the value chain."
By Neil Ainger