Dive Brief:
- Electronic payments made through the Automated Clearing House Network rose 7.7% to 7.3 billion transactions in the third quarter, compared with a year-earlier, according to a release from Nacha, formerly known as the National Automated Clearing House Association. The value of the third-quarter electronic payments rose 13.8% to $18.1 trillion, Nacha said.
- A rise in business-to-business (B2B) payments boosted the overall volume. They increased at more than twice the rate of overall payments, climbing 18.7% to 1.4 billion transactions, Nacha said.
- ACH's push into healthcare claims is also bearing fruit, hitting a record 109.4 million transactions in the third quarter, up 15.8%, compared with a year earlier, according to Nacha. That growth was driven in particular by ACH's adoption by smaller medical practices, according to the release.
Dive Insight:
The third-quarter payments volume surpassed a record set during the second quarter, a spokesperson for Nacha said. It was the latest in a string of quarterly volume records, just barely outpacing the second quarter.
The blistering B2B payments expansion offset an ebbing of the COVID-19 pandemic stimulus payments that lifted flow through the network last year. As employees retreated to working from home last year following the onset of the deadly virus in March, businesses found an increased need to shift transaction flows to digital channels.
“The B2B numbers tell a straightforward story of businesses switching to ACH payments during the pandemic and not looking back,” Jane Larimer, Nacha's president and CEO, said in the release. Nacha is the non-profit operator of the ACH network.
Still, the 7.7% third quarter increase was lower than the 9% clip at which third-quarter payments rose last year over 2019.
In the third-quarter this year, debit transactions accounted for more than half of the transactions, with 4.1 billion debit payments and 3.2 billion credit payments. That was the same percentage split as for the quarter last year.
The ACH Network, a national automated payments system with government and private sector participation, is the principal electronic distributor of stimulus payments.
Health care accounts for about 20% of the U.S. economy and has been a major focus since 2014, ACH Network Senior Vice President Mike Herd said in an interview. "COVID accelerated a change in electronic payments adoption that has been transformational rather than incremental," he said, adding that he expects continued strong ACH adoption by healthcare providers, including at dental practices.
Small medical practices are tapping ACH for speed and convenience, according to ACH's Larimer. "This is convenient for practices of all sizes, but especially smaller ones with limited staff and resources,” she said in the release.
Government COVID stimulus payments have eased significantly and contributed to the slight slowdown in ACH's growth pace in the third quarter, while child tax credits payments continue apace at about 30 million transactions a month, but that general stimulus payments have all but ended as have expanded unemployment benefits.
Increasing the speed of payments has been a big focus at ACH. While it has limited the size of the transactions eligible for same-day service, it increased that maximum to $100,000 last year and plans to lift the limit to $1 million next March. This year, it also increased the daily time period during which same-day transactions can be made.
Same day payments volume skyrocketed during the third-quarter to 142.8 million transactions, with a value of $236 billion, up 52.1% and 90.4% respectively, Nacha said in the release. B2B same-day volume more than doubled on both fronts.
ACH Network works with direct deposits and direct payments and can reach all U.S. bank and credit union accounts. Nearly 27 billion ACH Network payments were made in 2020, valued at close to $62 trillion.
