2018’s Q4 was a flourishing period for the automated clearing house network. ACH performed relatively well compared to the past year in many facets. But the following payment avenues went up the most leading the network to rake in billions in revenue.
- Same-day ACH transactions,
- Person-to-person payments (P2P),
- and Ecommerce.
ACH is a network that links almost all US financial institutions. Last year it recorded 5.97 billion transactions, an 8.7% uptick from 5.49 billion in 2017.According to NACHA (the body that runs ACH),this so far, the fastest growth the network has seen in 11 years.
Transaction volumes were as follows;
- 3.5 billion debits
- 2.4 billion credits
Same-day Transactions Increased
For many years, the main selling point for ACH has been same-day transactions— a service thatseeks to offer faster clearing & settlement. Achieving these two will help the network encounterincreasing competition from fintechbigwigs.
As a whole (Credits plus Debits), Same-day ACH transactions went up 46% year-over-year to a whopping 51.3 million all the way from 35.2 million in 2017’s Q4, according to a report by Herndon, Va.-based NACHA.
P2P Payments also Went Up
P2P payments are also gaining grounds. ACH describes them as WEB credits. The most common examples of P2P services areVenmoby PayPal, and Zelle, the back-sponsored service thatprocesses ACH credits. In last year’s Q4, similar transactions raked in 37.9 million marking a rise of 46.9% from 25.8 million in 2017.
According to Michael Herd, one of NACHA’s senior vice presidents, P2P paymentshave gained popularity for some time, but what we are experiencing now with the increasing year-over-year growth is acceptance.
“Customers are adopting these services more in theirdaily lives to ease and speed payments, and more and more retailers/vendors are using ACH. And now, we can only expect continued adoption and usage.”
WEB debits, NACHA’s second-main transaction code featuresonline commerce payments. The code grew 14.5% to record 1.57 billion transactions in comparison to 2017’s last quarter which tallied 1.37 billion payments.
ACH is growing against all the odds. Not even the recent news of NACHA’s delay of the new third processing window can stop the boom of this means of payment. Though same-day payments and P2P are still the most used avenues, we expect payment experts to streamline other back-office payment codes to increase adoption rates.
Author Bio: As the FAM account executive, Michael Hollis has funded millions by using merchant funding solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.