NACHA Reports 12.6 Percent Growth in ACH Volumes in 2007

“ACH payment volume continues to double every five years with increases experienced across all transaction categories,” said Elliott C. McEntee, chief executive officer of NACHA. “This growth of the ACH Network illustrates that financial institutions and their customers recognize the value of ACH payments. The 2007 Federal Reserve Payments Study, which revealed ACH payments had the largest compound annual growth rate, 18.6 percent, of all non-cash payments, confirms the widespread appeal and value of the ACH Network. The numbers speak for themselves.”

The nation’s financial institutions originated 13.3 percent more ACH payments in 2007 than in 2006. The number of these payments was 16.97 billion, a jump of almost 2 billion over 2006, which were valued at $32.9 trillion. Inter-bank ACH payments—those sent from one financial institution to another—increased by 14.3 percent in 2007. On-us payments—those that remain within a single financial institution—increased by 10.1 percent.

The remaining ACH payments, originated by the Federal government, exceeded 1 billion ACH payments for the second consecutive year. The Federal government’s ACH volume was up 3.6 percent over 2006, and valued at $3.7 trillion.

ACH payments include Direct Deposit of payroll, Social Security benefits and tax refunds, Direct Payment of consumer bills, bill payments by Internet and telephone, check conversion, business-to-business payments, and Federal tax withholdings.

Consumer Payments

American consumers use the ACH Network primarily to pay bills automatically and electronically, and to receive income and benefit payments via Direct Deposit. NACHA estimates that more than 8.5 billion consumer bills were paid via the ACH Network in 2007, including pre-authorized debits, Internet and telephone-initiated payments, and checks converted into ACH payments.

Annual volume for Accounts Receivable (ARC) check conversion grew by more than 600 million payments to 3.5 billion, an increase of 23 percent. ARC accounted for 33 percent of financial institutions’ ACH transaction growth in 2007.

Internet-initiated ACH payments (WEB) grew by an estimated 26 percent to 2.3 billion. NACHA estimates that 85 percent of Internet-initiated ACH payments are to pay bills via companies’ or billing services’ Web sites, and 10 percent are to transfer funds.

The number of pre-authorized, automatic bill payments—known as Direct Payment—increased by 3.6 percent to 3.4 billion payments.

Direct Deposit remains the most widely used type of ACH payment. The number of Direct Deposits in 2007 increased by 6.2 percent to 5 billion payments. Direct Deposit is used for payroll, expense and travel reimbursement, pension and annuity payments, interest payments, retirement and mutual fund distributions, Social Security, Veterans and other government benefits, and tax refunds. The average dollar amount of a Direct Deposit was $1,394.

Business Payments

American businesses and government agencies use the ACH Network for payments to and from trading partners, vendor payments, business-to-government tax withholdings, intra-company cash management transfers, and to exchange remittance information regarding payments.

The total number of these business-to-business ACH payments grew to 2.5 billion in 2007, up 8.5 percent over 2006. Financial electronic data interchange—the electronic exchange of payment-related information or financial-related documents in standard formats between business partners on the ACH Network—grew by 11.9 percent in 2007. In 2007, there were 1.1 billion EDI-formatted remittance records accompanying ACH payments. The number of financial EDI payments in 2007 was 340 million, up 18.1 percent over 2006.