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Monday, February 7, 2022

ACH records banner year

To the list of electronic payment options gaining converts due to economic and behavioral changes brought in by COVID-19, add the automated clearing house. More than 29 billion payments valued at $73 trillion flowed across the ACH network in 2021, Nacha just reported. That's an increase of 8.7 percent (or 2.3 billion) in transactions.

The total value of payments rose 17.4 percent or $10.8 trillion. Last year was the seventh consecutive year total volume increased by at least 1 billion payments, and the ninth straight year the total value increase exceeded $1 trillion.

Business-to-business payments drove a lot of the growth; so did government stimulus money. Nacha recorded 5.5 billion payments valued at $50 trillion as B2B transactions, a 20.4 percent increase over 2020. Over the past two years, B2B payments rose 33.2 percent. Medical and dental facilities are increasingly receiving claims payments via the ACH. There were 426.3 million such payments valued at $2 trillion processed through the ACH in 2021. That's up 17.9 percent over 2020 tallies, Nacha said.

"Throughout 2021, as the accelerated shift from paper to electronic payments continued, the ACH network proved its resiliency and value to the nation," said Jane Larimer, Nacha president and CEO. "Working with our partners in government, at financial institutions, and the ACH operators, the ACH network seamlessly handled over 143 million economic impact payments, 182 million Advance Child Tax Credit payments, and hundreds of millions of unemployment benefits, all by Direct Deposit. These payments brought help to Americans at a time when they needed it most."

Same-day ACH use skyrockets

The ACH was created in the 1970s as an electronic alternative to check payments. Checks at the time represented the most prominent noncash payment method. The going was slow for about the first 40 years. However, over the past decade ACH payment volumes have nearly doubled while check payments continue to decline. In 2020, just under 3.8 trillion checks valued at about $8 trillion cleared through the Federal Reserve Bank System. Ten years prior, the Fed processed 7.6 trillion checks valued at about $6.5 trillion.

The move to same-day ACH has been a boon for the network. Prior to 2016, the fastest a payment could process and settle through the ACH was on a next-day basis; two- to three-day schedules were not uncommon. In 2016, Nacha rule changes made same-day settlement a possibility.

Common applications for same-day ACH include payroll, urgent payouts for insurance claims, bill payments and person-to-person payments, according to Nacha.

Last year, same-day ACH payments grew by nearly 74 percent, and the total value of same-day ACH payments grew by over 105 percent, Nacha reported. Also, ACH operating hours were extended last year to support four settlements a day, further enhancing its ability to support same-day payments. Prior to 2016, ACH payments were batched and settled just once a day.

The only drawback to ACH for greater B2B use now appears to be the $100,000 transaction cap. But that, too, is set to change. "Our latest same-day ACH enhancement takes effect March 18, 2022: an increase in the per-payment limit to $1 million, making same-day ACH available for even greater use," Larimer said. end of article

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